2013 (10) TMI 795 - AT - Central Excise

Bogus Invoices CENVAT Credit - Penalty under Rule 15 and 26 of the Cenvat Credit Rules Waiver of Pre-deposit - Held that - Prima facie when the appellant claim to have purchased the CR Strips from M/s. Ayushi Steel who claim to have purchased these goods from M/s. Pasondia Steel and on investigation in respect of M/s. Pasondia Steel, it had been found that during the period of dispute, there was no manufacturing activity in their factory and only bogus invoices had been issued to a number of dealer including M/s. Steel - Prima facie the invoices issued by the appellant were bogus invoices - Following V. K. ENTERPRISES Versus COMMISSIONER OF C. EX., PANCHKULA 2009 (9) TMI 362 - CESTAT, NEW DELHI - even during period prior to 01.03.07 penalty would be imposable on such persons under Rule 25(1)(d), as the person who purports to have sold the goods, cannot say that he was not a person concerned with selling of the goods and merely issued invoices or that he did not contravene any provision relating to evasion of duty - this is not case for total waiver - The appellant are directed to deposit an amount of Rs. 20,000 upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
- Imposition of penalty on the appellant for issuing bogus invoices
- Validity of the Cenvat Credit demand and penalties imposed on the appellant and M/s. Rasandik
- Interpretation of rules regarding penalty for issuing bogus Cenvatable invoices
- Appeal against the order-in-appeal confirming the penalties

Analysis:

The case involves an appeal by a second stage dealer, appellant M/s. Nidhi Enterprises, dealing in steel items, who issued invoices for the supply of C.R. Strip to M/s. Rasandik Engineering Industries India Ltd. The invoices allowed M/s. Rasandik to claim Cenvat Credit, but subsequent investigations revealed that the appellant had issued bogus invoices without actually supplying any material. The Deputy Commissioner confirmed the Cenvat Credit demand against M/s. Rasandik and imposed penalties on both M/s. Rasandik and the appellant under relevant rules. The Commissioner (Appeals) upheld this decision, citing a judgment of the Hon'ble Punjab & Haryana High Court.

During the hearing, the appellant argued that there was no provision for imposing penalties on those issuing bogus invoices during the period in question, and such a provision was introduced later. They requested a waiver of the penalty pre-deposit for the appeal hearing. The Department, represented by the ld. DR, opposed the stay application, relying on the findings of the Commissioner (Appeals) and the aforementioned High Court judgment.

The tribunal, per Rakesh Kumar, considered the submissions and records. It noted that investigations revealed no manufacturing activity at M/s. Pasondia Steel, the supposed source of the goods, indicating the invoices were indeed bogus. Regarding the argument about the timing of penalty provisions, the tribunal referred to the High Court judgment stating that penalties could be imposed even before the specific provision was introduced. Consequently, the tribunal directed the appellant to deposit a specific amount within a set period, with the balance being waived for the appeal hearing. The recovery of the penalty was stayed pending the appeal's disposal, with a compliance report due on a specified date.