2021 (11) TMI 460 - AT - Central Excise

Confiscation of goods - imposition of penalty - CENVAT Credit - appellant had issued the invoice without actual supply of goods - HELD THAT - Since, the show cause notice did not implead M/s. Mittal Corp Limited, seeking confiscation of goods as well as imposition of redemption fine, the adjudication order confirming such demand cannot be considerd as legal and proper. Therefore, the impugned order confirming confiscation of goods and imposition of redemption fine is set aside and the appeal to such extent is allowed in favour of the appellant M/s. Mittal Corp Limited. Imposition of penalty under Rule 15A ibid - HELD THAT - The receipt of the impugned goods in the factory premises have not been accounted for in the statutory records as mandated in the Central Excise as well as Cenvat statutes. Thus, the appellant M/s. Mittal Corp Limited is exposed the penal consequences provided under Rule 15A ibid. The appeal filed by Mittal Corp Limited is partly allowed in setting aside the impugned order, insofar as it has upheld confiscation and imposition of redemption fine - the quantum of penalty imposed on the other appellants namely, M/s. Nakoda Ferromet and Heeralal Kanungo can be reduced in the interest of justice - Appeal allowed in part.

Summary

Issues:
- Confiscation of goods and imposition of penalty on the appellant
- Nature of contravention of statutory provisions
- Imposition of penalty under Rule 26(2) of Central Excise Rules, 2002
- Confiscation of goods and imposition of redemption fine on M/s. Mittal Corp Limited
- Imposition of penalty under Rule 15A of the Cenvat Credit Rules, 2004
- Reduction of penalty on M/s. Nakoda Ferromet and Heeralal Kanungo

Analysis:

The case involved the appellant, a trading entity registered with the Central Excise Department, engaged in trading SS Scrap. The investigation revealed that the appellant issued invoices without actual supply of goods to another entity, M/s. Mittal Corp Limited, allegedly to facilitate irregular Cenvat credit. The department initiated show cause proceedings leading to an adjudication order disallowing Cenvat credit, imposing interest, and ordering recovery from the appellant. The goods seized from M/s. Mittal Corp Limited were confiscated, and a redemption fine was imposed. Penalties were also imposed on all appellants. The Commissioner (Appeals) modified the original order, setting aside the Cenvat demand confirmation and reducing the redemption fine. Aggrieved by this, the appellants filed appeals before the Tribunal.

The Advocate for M/s. Mittal Corp Limited argued that the show cause notice did not propose confiscation of goods or penalties, challenging the actions taken by the department. It was contended that the lack of specific allegations in the notice regarding contravention made the imposition of penalties improper. The Advocates for M/s. Nakoda Ferromet and Heeralal Kanungo sought a reduction in the penalties imposed under different rules.

After hearing both sides and examining the records, the Tribunal found discrepancies in the show cause notice and the adjudication order regarding confiscation of goods and penalties. The order had imposed penalties on M/s. Mittal Corp Limited, not mentioned in the notice, rendering the actions unsustainable. The Tribunal set aside the confirmation of confiscation and redemption fine for M/s. Mittal Corp Limited. Regarding penalties under Rule 15A, the Tribunal held that the failure to account for received goods in statutory records exposed M/s. Mittal Corp Limited to penal consequences.

Consequently, the appeal by M/s. Mittal Corp Limited was partly allowed by setting aside the order upholding confiscation and redemption fine. Considering the circumstances, the Tribunal decided to reduce the penalties imposed on M/s. Nakoda Ferromet and Heeralal Kanungo by 50% in the interest of justice. The appeals were disposed of accordingly.