2017 (9) TMI 1316 - AT - Central Excise

CENVAT credit - duty paying invoices - credit taken on the basis of false TR-6 Challans - penalty on Director - Held that - allegation of producing false or fake TR-6 challans was not disputed. Hence, the appellant is not entitled to any relief on penalty as it is a clear case of payment of duty on false/fake challans and the imposition of penalties are justified - The plea of the appellant to shift the entire blame on the employee is without any substance cannot be accepted - the director of the appellant company is rightly penalized - appeal dismissed - decided against appellant.

Summary

Issues:
- Confirmation of demand of Central Excise duty
- Imposition of interest and penalty
- Liability of the director of the company for penalties
- Allegation of producing false TR-6/GAR-7 Challans
- Dispute regarding penalty imposition under Section 11AC
- Violation of Rule 8 (3A) of the Central Excise Rules, 2002
- Appeal against penalties and liability

Confirmation of demand of Central Excise duty:
The case involved the confirmation of Central Excise duty amounting to ?8,16,645 under Section 11A(2) of the Central Excise Act, 1944, based on show cause notices alleging false TR-6 Challans. The Commissioner (Appeal) upheld the demand along with interest and penalties, citing violations of the Central Excise Rules.

Imposition of interest and penalty:
The Commissioner (Appeal) also imposed interest at appropriate rates and penalties equal to the duty amount under Section 11AC of the Central Excise Act, 1944, for removal of goods without payment of duty using false TR-6/GAR-7 Challans. Additional penalties and interest were imposed for non-compliance with the Central Excise Rules.

Liability of the director of the company for penalties:
Penalties were imposed on the director of the company for defrauding the Government Exchequer with the motive to evade Central Excise duty payment. The director's involvement in the fraudulent activities was highlighted, leading to the imposition of penalties.

Allegation of producing false TR-6/GAR-7 Challans:
The appellant admitted to producing false/fake TR-6/GAR-7 Challans for payment of duty, which was a crucial aspect of the case. The Commissioner (Appeal) emphasized that penalties under Section 11AC were mandatory for such fraudulent actions, and the appellant's plea to shift blame onto an employee was dismissed.

Dispute regarding penalty imposition under Section 11AC:
The appellant contested the penalty imposition under Section 11AC, arguing that the penalties were not justified due to the payment of the duty amount. However, the Commissioner (Appeal) maintained that penalties were mandatory for cases involving fraud or willful misstatements, as per Section 11AC.

Violation of Rule 8 (3A) of the Central Excise Rules, 2002:
The violation of Rule 8 (3A) of the Central Excise Rules, 2002 was a significant factor in the penalty imposition. The appellant's argument that penalties could not be imposed due to this violation was rejected, emphasizing the seriousness of using false payment documents.

Appeal against penalties and liability:
The appellant's appeals challenging the penalties and director's liability were dismissed, as the Tribunal agreed with the lower authorities' findings. The Tribunal upheld the penalties and confirmed that the director of the company was rightly penalized for the fraudulent activities, ultimately dismissing the appeals.

This detailed analysis outlines the key issues addressed in the legal judgment, focusing on the confirmation of duty demand, imposition of penalties, director's liability, fraudulent activities involving false documents, and the dismissal of appeals against penalties and liability.