2017 (4) TMI 271 - AT - Central Excise

Imposition of penalty u/r 25 of CER, 2002 - the appellants have issued invoice without accompanied the goods - Held that - to impose penalty u/r 25, the goods are required to be held liable for confiscation. Admittedly, in the impugned order the goods were not held to be liable for confiscation - penalty u/r 25 can be imposed if ingredients of section 11AC of the Act has been complied with. Admittedly, in the impugned order the adjudicating authority itself has held that the cenvat credit was availed wrongly. If the credit is availed wrongly, therefore, mala-fide intents of assessee are missing. As the mala-fide intent is missing, the provisions of section 11AC of the Act are not attracted. Consequently, the provisions of Rules 25 of the CER, 2002 are not invokable - penalty set aside - appeal allowed - decided in favor of assessee.

Summary

Issues:
Penalty imposition under Rule 25 of the Central Excise Rules, 2002 without goods being held liable for confiscation and without mala-fide intent.

Analysis:
The appellants appealed against an order imposing penalties under Rule 25 of the Central Excise Rules, 2002 for issuing invoices without accompanying goods. Despite the absence of representation from the appellant, the case was considered for disposal on merits due to its relevance to the year 2010. The penalties were imposed based on the contravention of Act and Rules by the appellants. The respondent relied on previous court decisions to support the imposition of penalties.

In the analysis, it was noted that the penalties in the referenced court cases were confirmed under Rule 25 (1)(d) of the Central Excise Rules, 2002, but it was unclear whether the goods were held liable for confiscation in those cases. The presiding judge, after considering the submissions and the relevant provisions of Rule 25, highlighted that for imposing penalties under this rule, the goods must be held liable for confiscation. However, in the impugned order, the goods were not held liable for confiscation, rendering the penalties invalid.

Moreover, it was emphasized that penalties under Rule 25 can only be imposed if the requirements of section 11AC of the Act are met. The adjudicating authority in the impugned order had determined that the cenvat credit was wrongly availed, but without any mala-fide intent on the part of the assessee. As the mala-fide intent was absent, the provisions of section 11AC of the Act were not applicable, making Rule 25 of the Central Excise Rules, 2002 inapplicable as well. Consequently, the penalties imposed on both appellants were deemed not imposable.

Therefore, the penalties imposed on the appellants were set aside, and the appeals were allowed by overturning the impugned order.