2012 (10) TMI 941 - AT - Central Excise

Cenvat credit - Recovery of credit fraudulently taken - Penalty - Held that - penalty could not have been imposed on the offence under consideration which took place prior to 1-3-2007 and is of the type covered by Rule 26(2) introduced from 1-3-2007 - Rule 25(1)(d) and Rule 26 as it stood prior to 1-3-2007 was good enough for imposing penalty on misdeeds of the type involved in this case. The observation in para 8 of the order is only the general principle that a penal provision introduced with effect from a particular date would not apply for acts on dates prior to such date - Following decision of Vee Kay Enterprises v. CCE 2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT - Decided against assessee.

Summary

Issues:
- Imposition of penalty under Rule 26 of Central Excise Rules, 2002 for issuing excise duty invoices without delivery of goods.
- Applicability of Rule 26(2) introduced from 1-3-2007 to acts committed prior to that date.

Analysis:

1. The case involved the issuance of invoices purporting to cover the sale of excisable goods without actual supply to claim Cenvat credit fraudulently. The appellant argued that the loss to revenue had already been recovered from the entity that took the credit, and thus, the penalty imposed was not maintainable.

2. The appellant, a private limited company, was penalized under Rule 26(2) of Central Excise Rules, 2004 for issuing invoices without goods during Jan 2007 to March 2007. The counsel highlighted the changes in Rule 26 from the previous version, emphasizing that the penalty was for individuals selling goods, which did not apply in this case.

3. The Revenue contended that the penalty under Rule 26 was justified based on a judgment by the Punjab and Haryana High Court, which held that even if Rule 26(2) did not apply, penalties could still be levied for dealing with goods liable for confiscation. The High Court's decision clarified that the amended provisions introduced on 1-3-2007 did not retroactively apply to acts committed before that date.

4. The appellant's counsel argued that the penalty could not be imposed for offenses occurring before 1-3-2007 under Rule 26(2), as it was introduced post the relevant period. However, the High Court's ruling established that Rule 25(1)(d) and Rule 26 as it stood before 1-3-2007 were sufficient to impose penalties for such misconduct.

5. Ultimately, the Tribunal rejected the appeal based on the precedent set by the Punjab and Haryana High Court, which upheld the applicability of Rule 26 for penalties related to acts committed before the amendment on 1-3-2007. The judgment emphasized that the general principle dictates that penal provisions introduced after a specific date do not apply to actions preceding that date, leading to the dismissal of the appeal.

In conclusion, the judgment clarified the imposition of penalties under Rule 26 of the Central Excise Rules, 2002 for issuing excise duty invoices without delivering goods and addressed the applicability of Rule 26(2) introduced post the relevant period to acts committed before its enactment.