2015 (10) TMI 157 - AT - Central Excise

Penalty under Rule 26 of the Central Excise Rules, 2002 - CENVAT Credit - Held that - No statement of the appellant has been recorded neither any summons to record the statement have been issued to the appellant. The statement of manufacturing supplier shows that they were issuing invoices to M/s. Rupesh Bansal. The contention of the appellant before me is that they have received the goods under the cover of invoices issued by M/s. Khemka Ispat Limited. This statement of the appellant made before me was never tried to test the level of investigation him nor any other corroborative evidence have been produced in investigation that the appellant has received invoices, not the goods. On the contrary, the statement of the second stage dealer to whom the appellant has issued invoices in his statement categorically admitted that they have received the goods from the appellant against the duty paid which were sold to the manufacturing buyer who already admitted that he has received the goods. Therefore/ the statement of the second stage dealer and manufacturing buyer supposed the case of the appellant and in the absence of any statement of the appellant now the question arises why the statement of the appellant was not recorded during the course of investigation. Therefore, I conclude that investigation against the appellant is incomplete. - penalty on the appellant is not imposable without any corroborative evidence against the appellant.

Summary

Issues involved:

1. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 without recording the statement of the appellant.
2. Validity of penalty imposition based on the investigation findings and statements of other parties involved.
3. Comparison with previous cases where penalties were set aside due to lack of statements from relevant parties.

Analysis:

Issue 1: Imposition of penalty without recording the statement of the appellant

The appellant appealed against the penalty imposed under Rule 26 of the Central Excise Rules, 2002 without his statement being recorded during the investigation. The appellant argued that the penalty should not be imposed without his statement being taken into account, especially when statements from other parties involved were considered.

Issue 2: Validity of penalty based on investigation findings and statements of other parties

The investigation revealed a series of transactions involving the appellant, second stage dealers, and manufacturing buyers. While the manufacturing supplier denied manufacturing goods during the period in question, the appellant claimed to have received goods under the cover of invoices issued by the supplier. The appellant's argument was supported by statements from the second stage dealer and manufacturing buyer confirming receipt of goods against invoices issued by the appellant. The absence of the appellant's statement raised questions about the completeness of the investigation.

Issue 3: Comparison with previous cases where penalties were set aside

The appellant cited previous cases where penalties were set aside due to incomplete investigations and lack of statements from relevant parties. The appellant argued that similar treatment should be applied in this case, as the absence of the appellant's statement and reliance on statements from other parties undermined the imposition of the penalty.

In the judgment, the Tribunal noted the incomplete nature of the investigation against the appellant due to the absence of the appellant's statement. The Tribunal found that the statements from the second stage dealer and manufacturing buyer supported the appellant's position, indicating a lack of evidence against the appellant. Consequently, the Tribunal concluded that the penalty on the appellant was not justifiable without corroborative evidence directly implicating the appellant. As a result, the impugned order imposing the penalty was set aside, and the appeal was allowed in favor of the appellant.