2008 (10) TMI 236 - AT - Central Excise

Penalty - Personal penalty - Rule 26 of Central Excise Rules 2002 - Issue of invoice without delivery of goods - Held that - imposition of penalty on a person who issues invoices without delivery of goods or abates in making such invoice would be applicable from insertion of the said sub-rule. The present case relates to the period 1990-91. It is noted that the Tribunal in the respondents own case for the different period by Final Order No. 1046/07-SM(BR) dated 8-6-2007 2007 TMI - 1581 - CESTAT NEW DELHI rejected the appeal filed by the Revenue on the identical situation - penalty set aside.

Summary

Issues: Imposition of penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 for issuing invoices without delivery of goods leading to ineligible Cenvat credit benefit.

In this case, the Adjudicating Authority imposed a penalty of Rs. 1 lakh on the respondents under Rule 209A of the Central Excise Rules, 1944, for issuing invoices without delivering goods, which allowed the manufacturer to avail ineligible Cenvat credit benefits. The Commissioner (Appeals) later set aside this penalty. The main contention was whether the penalty under Rule 209A was sustainable in this situation. The respondents argued that Rule 209A was amended by Notification No. 8/2007-C.E. (N.T.), dated 1-3-2007, inserting sub-rule (2) which specified penalties for issuing invoices without delivery of goods leading to ineligible benefits. The Tribunal noted that the sub-rule came into effect after the period in question (1990-91) and referred to a previous case where a similar appeal by the Revenue was rejected. Consequently, the Tribunal found no issue with the Commissioner (Appeals) decision and dismissed the Revenue's appeal.

In the detailed analysis, the Tribunal considered the applicability of Rule 209A of the erstwhile Central Excise Rules, 1944, in a case where invoices were issued without delivery of goods, resulting in the manufacturer availing ineligible Cenvat credit benefits. The main argument revolved around whether the penalty under Rule 209A was valid in the current scenario. The respondents contended that Rule 209A had been amended by Notification No. 8/2007-C.E. (N.T.), dated 1-3-2007, introducing sub-rule (2) which outlined penalties for such actions. However, the Tribunal observed that the sub-rule came into effect after the period under consideration (1990-91). Referring to a previous case where a similar appeal by the Revenue was rejected, the Tribunal found consistency in its interpretation and upheld the Commissioner (Appeals) decision to set aside the penalty imposed on the respondents. The Tribunal's decision was based on the timeline of the rule amendment and the precedent set in a previous case, leading to the rejection of the Revenue's appeal.