2018 (10) TMI 963 - AT - Central Excise

CENVAT Credit - fake invoices - without supplying the goods, the said party had issued fake invoices - penalty - Held that - Since the show cause notices issued to M/s. Jawala Steel Corporation, the supplier of goods are pending for adjudication, proceedings cannot be initiated against the appellants, who are only purchasers of the goods for confirmation of Cenvat demand and also for imposition of penalty. The matter is remanded back to the concerned original authority for passing reasoned and speaking order, subsequent to the adjudication of the proceedings pending against M/s. Jawala Steel Corporation - appeal allowed by way of remand.

Summary

Issues:
Appeal against duty demand, interest, and penalty imposed on the appellant.

Analysis:
The case involved an appeal against an order confirming duty demand, interest, and imposing a penalty on the appellant. The appellant, a purchaser of goods from M/s. Jawala Steel Corporation, faced proceedings initiated by the Central Excise Department based on allegations that fake invoices were issued by the supplier, leading to fraudulent Cenvat credit. The appellant argued that proceedings could not be initiated against them while show cause notices against the supplier were pending adjudication. The appellant relied on previous Tribunal decisions where similar orders were set aside, and the matter was remanded for fresh adjudication after resolving the case against the supplier.

The counsel for the appellant contended that the proceedings against the appellant should be stayed until the case against the supplier was resolved. The respondent's counsel agreed with the appellant's submissions. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original authority for a reasoned decision after the adjudication of the proceedings against M/s. Jawala Steel Corporation. The appeal was allowed by way of remand, emphasizing the need for a comprehensive adjudication process following the resolution of the supplier's case.

In conclusion, the Tribunal's decision highlighted the importance of resolving proceedings against the supplier before taking action against the purchaser in cases involving duty demand and penalty related to fraudulent transactions. The judgment emphasized the necessity for a thorough and reasoned decision-making process, ensuring fair treatment and proper adjudication based on the resolution of underlying issues with the supplier.