2014 (9) TMI 844 - AT - Central Excise

Issuance of Cenvatable invoices in respect of steel goods viz CR strips - there was no manufacturing activity undertaken - fraud - Penalty under Rule 26 of Central Excise Rules 2002 - Held that - Penalty on the appellants can be imposed and it is all the more so because in the present case, as has been mentioned earlier there were goods supplied but the said goods were not relatable to the invoices issued by the appellants. as has been mentioned earlier, the evidence is clearcut including the confessional statement of the appellants which was never retracted. The fact is that as a dealer, the appellants indulged in such a deliberate and blatant act to issue invoices without the related goods based on invoices issued by M/s. Pasondia again without the related goods. In such a situation No mitigating factors favouring the appellants at all. - Decided against assessee.

Summary

Issues:
- Imposition of penalties under Rule 26 of Central Excise Rules 2002 for different periods based on upheld Orders-in-Appeal.

Analysis:
1. The appellants filed appeals against three Orders-in-Appeal upholding penalties under Rule 26 of Central Excise Rules 2002 for different periods. The appellants issued Cenvatable invoices for steel goods based on purchases from M/s. Pasondia Steel Profiles Ltd. However, investigations revealed that M/s. Pasondia did not undertake any manufacturing activity during the relevant periods and did not supply the goods mentioned in the invoices. The appellants admitted to not purchasing any goods from M/s. Pasondia but issuing invoices based on those received.

2. The appellants argued that the main case against M/s. Pasondia was pending and contended that no penalty was imposable under Rule 26(2) before the amendment effective from 01.03.2007. However, the Tribunal referred to a judgment stating that penalties could be imposed even prior to the amendment if goods were sold based on mere invoices without actual supply. The penalties in this case were imposed under Rule 26 and not Rule 26(2).

3. The Tribunal held that penalties could be levied as the appellants were involved in selling goods for which Cenvat credit was taken, even if Rule 26(2) was not applicable. The appellants issued invoices without delivering goods, intending to evade duty. The evidence, including confessional statements, supported the deliberate act of issuing invoices without related goods. The Tribunal found no mitigating factors in favor of the appellants.

4. Considering the clear evidence and the deliberate actions of the appellants, the Tribunal found no infirmity in the impugned orders and rejected the appeals. The judgment highlighted the appellants' deliberate and blatant act of issuing invoices without corresponding goods, leading to the imposition of penalties under Rule 26.