2018 (5) TMI 296 - AT - Central Excise

Penalty u/r 26(2) of Central Excise Rules, 2002 - fraudulent availment of CENVAT credit - bogus invoices without receipt of goods - benefit of reduced penalty - Held that - The fact that the appellant had been wantonly issuing bogus invoices to 14 manufacturers without supply of any goods shows systematic and flagrant violation of Cenvat Credit Rules, 2004. Such brazen violation of law in a well-planned fashion deserves no sympathy - reduction of penalty to 25% on dealers does not have the legal backing as there is no provision in Central Excise Act or Central Excise Rules to reduce the penalty on the dealers to 25% Considering the admitted fraud by the appellant and its systematic nature involving 14 manufacturers over a period of time, I find that the quantum of penalty under Rule 26(2) of Central Excise Rules, 2002 is fully justified and needs no interference. Appeal dismissed - decided against appellant.

Summary

Issues:
Fraudulent issuance of bogus invoices leading to availing of Cenvat credit, imposition of penalty under Rule 26(2) of Central Excise Rules, 2002, plea for reduction of penalty to 25% based on previous Tribunal decisions.

Analysis:
The appellant, a first stage dealer, was found to have issued bogus invoices without supplying goods to 15 manufacturers, resulting in fraudulent availment of Cenvat credit. While one manufacturer settled with the Settlement Commission, admitting the charges, the appellant faced penalties for abetting fraudulent availment of Cenvat credit for the remaining 14 manufacturers. The Commissioner (Appeals) rejected the appellant's appeal, leading to the current appeal.

The appellant's representative sought a reduction of penalty to 25% based on prior Tribunal decisions related to similar cases. However, the respondent argued against leniency due to the systematic nature of the offense and the absence of legal provisions allowing such reductions for dealers as opposed to manufacturers.

The Tribunal noted the appellant's systematic issuance of bogus invoices to multiple manufacturers, emphasizing the serious violation of Cenvat Credit Rules. The Tribunal highlighted that the cited Tribunal decisions were not binding and that there was no legal provision for reducing penalties to 25% for dealers. Given the gravity of the offense and the admitted fraud involving multiple manufacturers, the Tribunal upheld the imposition of the penalty under Rule 26(2) of the Central Excise Rules, 2002.

Ultimately, the Tribunal found no merit in the appellant's appeal and dismissed it, affirming the penalty imposed under Rule 26(2) of the Central Excise Rules, 2002.