2017 (9) TMI 1181 - AT - Central Excise

Clandestine removal - fake invoices without supplying the goods - Held that - the proceedings in relation to SCN by DGCEI against M/s Jwala Steel Corporation (JSC) are still pending for adjudication. Since the proceedings against M/s. Jawala Steel Corporation, purported supplier of the goods and issuer of fake invoices, against whom allegations of clandestine removal of goods are pending adjudication, the proceedings cannot be initiated against the appellant who issued Cenvatable invoices on strength of invoices of M/s JSC - matter remanded back to the adjudicating authority to adjudicate the case subsequent to the adjudication in the matter of M/s. Jawala Steel Corporation - appeal allowed by way of remand.

Summary

Issues Involved:
Identification of duty demand and penalty imposition based on alleged issuance of fake invoices without physical delivery of goods.

Analysis:
The judgment by the Appellate Tribunal CESTAT CHANDIGARH, delivered by Mr. Devender Singh, Member (Technical), addresses the issue of duty demand and penalty imposition on M/s. Jawala Steel Corporation. The case involved the manufacturer of steel pipes, accused of clandestinely removing inputs supplied by another entity and issuing fake invoices without physically delivering the goods. The Directorate General of Central Excise Intelligence (DGCEI) initiated proceedings against M/s. Jawala Steel Corporation, resulting in the demand of duty amounting to ?11,31,70,440 and imposition of penalties under Rule 26 of Central Excise Rules, 2002. During the hearing, it was noted that the proceedings against M/s. Jawala Steel Corporation were still pending adjudication. The tribunal observed that since the allegations against the purported supplier of goods were yet to be resolved, the appellant, who issued Cenvatable invoices based on the invoices of M/s. Jawala Steel Corporation, could not be held liable. The tribunal referred to previous Final Orders of the Principal Bench supporting this view. Consequently, the impugned orders were set aside, and the matter was remanded back to the adjudicating authority for further consideration post the resolution of the case against M/s. Jawala Steel Corporation. The appellants were granted a fair opportunity to defend their cases in light of the remand. Ultimately, the appeals were allowed through the remand process.