2017 (12) TMI 549 - AT - Central Excise

Penalty - Department has alleged that M/s. Laxmi Pipes & Fittings Pvt. Ltd. had availed Cenvat Credit without actual receipt of the goods - Held that - Since the statement recorded from Shri Mukesh Sangla was not considered by the Tribunal vide order dated 17.06.2015 and exonerated the appellants therein included Shri Mukesh Sangla holding that there is no clandestine receipt of only fabricated documents I am of the view that similar treatment can be adopted for appellant Shri Mukesh Sangla inasmuch as he was also the appellant before the Tribunal in the case booked against M/s. Parag Pentachem Pvt. Ltd. - penalty in both the cases set aside. With regard to imposition of penalty on Shri Sunil Kotari the Director of Laxmi Pipes & Fittings Pvt. Ltd. the Department has basically relied on the statement dated 06.12.2007 recorded from Shri Mukesh Sangla the Director of M/s. SOL and concluded that by diverting the goods to M/s. SOL M/s. Laxmi Pipe & Fittings Pvt. Ltd. had received the payment in cash through its Director Shri Sunil Kotari. Since the statement recorded from Shri Mukesh Sangle was discarded by this Tribunal in the same investigation conducted by Department such statement cannot be taken into contingence in view of the facts that the statements were discarded by the Tribunal on earlier occasions - penalty set aside. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved: Appeal against imposition of penalties under Rule 15 of the Cenvat Credit Rules, 2004 and under Rule 26 of the Central Excise Rules, 2002.

Analysis:

1. Imposition of Penalties on M/s. Laxmi Pipes & Fittings Pvt. Ltd.:
The Department imposed penalties on M/s. Laxmi Pipes & Fittings Pvt. Ltd. for availing Cenvat Credit without actual receipt of goods. The Department alleged that M/s. Laxmi Pipes paid an amount to M/s. Signet Overseas Ltd. (SOL) through cheques, which was then returned in cash. The impugned order confirmed the demand and imposed penalties. The Tribunal dismissed the appeal filed by M/s. Laxmi Pipes on grounds of non-prosecution. However, the present appellants challenged the penalties. The advocate for the appellants argued for equal treatment as other parties in similar investigations had penalties dropped. The Department's representative contended that the penalties were justified due to fraudulent activities involving fabricated documents. After considering the arguments and records, the judge found that penalties on M/s. Laxmi Pipes should be dropped, similar to previous cases where penalties were revoked. The appeal was allowed in favor of M/s. Laxmi Pipes.

2. Imposition of Penalty on Shri Mukesh Sangla:
Shri Mukesh Sangla, alleged to be a middleman, faced penalties based on statements indicating involvement in fraudulent activities. However, the Tribunal had previously dropped penalties against him in a related case. The judge, considering the previous decision and lack of new evidence, set aside the penalty imposed on Shri Mukesh Sangla, allowing the appeal in his favor.

3. Imposition of Penalty on Shri Sunil Kotari:
The Department relied on a statement from Shri Mukesh Sangla to impose penalties on Shri Sunil Kotari, director of M/s. Laxmi Pipes. However, the Tribunal had rejected similar statements in previous cases involving the same investigation. As the Department did not appeal previous tribunal decisions, the judge found no merit in maintaining penalties against Shri Sunil Kotari. Consequently, the penalties were set aside, and the appeals filed by the appellants were allowed.

This detailed analysis highlights the legal proceedings, arguments presented, and the judge's reasoning behind setting aside the penalties imposed under the specified rules.