2017 (5) TMI 755 - AT - Central Excise

Penalty u/r 26 of CER - fraudulent and wrong availment of huge amount of CENVAT Credit - fake transfer only paper transactions - Held that - The appellant has been found to be an important facilitator for M/s Akai the main noticee for fraudulent and wrong availment of CENVAT Credit when M/s Jagdamba entered into only paper transactions with M/s Akai without physically delivering the goods to M/s Akai - There are no redeeming facts which could in any way reduce the gravity and seriousness of the contraventions of law of Central Excise of the appellant M/s Jagdamba making them liable for penalty under the provisions of Rule 26 of CER 2002 - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Fraudulent and wrong availment of CENVAT Credit, Imposition of penalty under Rule 26 of Central Excise Rules 2002.

Analysis:
The case involves an appeal by M/s Jagdamba Dyeing & Printing Mills Pvt. Ltd against the imposition of a penalty of &8377; 10 lakhs under Rule 26 of Central Excise Rules 2002. The appeal arises from a Show Cause Notice issued to M/s Akai Fashions for availing rebate claim on the basis of fake invoices without supplying goods. The notice implicated M/s Jagdamba as a facilitator in fraudulent transactions to enable M/s Akai to avail inadmissible CENVAT Credit. The Central Excise officers found no manufacturing activity or goods at M/s Akai's premises, leading to the imposition of penalties on various parties, including M/s Jagdamba.

The Tribunal noted that M/s Jagdamba's Director confirmed the lack of correlation between the fabrics processed by M/s Jagdamba for M/s Akai and the goods cleared for export by M/s Akai. The appellant was found to have engaged in paper transactions without physically delivering goods to M/s Akai, facilitating the wrongful availment of CENVAT Credit. Consequently, M/s Jagdamba was held liable for penalty under Rule 26 of Central Excise Rules 2002.

The Tribunal emphasized the seriousness of the contraventions and the lack of mitigating factors, upholding the penalty imposed on M/s Jagdamba. The decision was based on the appellant's role as a key facilitator in the fraudulent transactions with M/s Akai, leading to the illegal benefits obtained. As a result, the Tribunal affirmed the impugned order and dismissed the appeal for lack of merit.

In conclusion, the judgment highlights the importance of compliance with Central Excise Rules and penalizes M/s Jagdamba for its involvement in facilitating the wrongful availment of CENVAT Credit by M/s Akai. The decision underscores the need for businesses to conduct transactions transparently and adhere to legal requirements to prevent fraudulent practices in the realm of excise duties.