2016 (8) TMI 115 - AT - Central Excise

Levy of penalty under Rule 25 of CER, 2002 issuing invoices without accompanying the goods whether penalties under Rule 25 of Central Excise Rules, 2002 read with section 11AC of the Central Excise Act, 1944 can be impose on the person who has not dealt with the excisable goods or not? Held that - appellant not dealt with the excisable goods at all. The penalties on the appellant under Rule 25 of the Central Excise rules, 2002 read with section 11AC of the Act are not warranted. - Appeal allowed. - Decided in favor of appellant.

Summary

Issues:
Appeal against imposition of penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.

Analysis:
1. Facts and Proceedings:
- An investigation alleged that the appellant issued invoices without accompanying goods, leading to denial of cenvat credit to buyers and initiation of penalty proceedings.
- The appellant challenged the penalty imposition under Rule 25 of Central Excise Rules, 2002.

2. Contentions:
- Appellant's consultant argued that pre-2007, penalties for issuing invoices without goods were not applicable, citing a High Court decision.
- The AR contended that the appellant's actions contravened Central Excise Rules/Act, supporting their stance with a Tribunal order.

3. Core Issue:
- The central issue was whether penalties under Rule 25 of Central Excise Rules, 2002 can be imposed on a party not dealing with excisable goods.

4. Legal Precedents:
- The High Court's judgment in a similar case emphasized that penalties for issuing invoices without goods were not applicable pre-2007.
- The Tribunal confirmed penalty deletion in a case where no goods were manufactured, emphasizing no penalty for mere paper transactions.

5. Decision and Rationale:
- After hearing both sides, it was concluded that penalties on the appellant were not justified as they did not deal with excisable goods.
- The judgment relied on legal precedents and the absence of provisions pre-2007 to support the decision to set aside the impugned orders.

6. Conclusion:
- The appeals were allowed, and the penalties imposed on the appellant were set aside based on the lack of involvement with excisable goods.
- The decision was made in line with legal interpretations and precedents, ensuring a fair and reasoned outcome for the appellant.