2022 (12) TMI 366 - AT - Central Excise

Levy of penalty Rule 26 of Central Excise Act, 2002 - charge of abatement in the offence of fraudulent availment of cenvat credit - HELD THAT - The penalties on the present appellants were imposed under Rule 26 of the Central Excise Rules, 2002 for the different role for the charge of abating the fraudulent availment of cenvat credit by Shree Ram Tubes Pvt Ltd. M/s. Shree Ram Tubes Pvt Ltd and many other notices have got their case settle under SVLDRS. Therefore, the main case of M/s. Shree Ram Tubes Pvt Ltd could not be decided on merit as the appeal was dismissed as withdrawn. In the present appeals as regard the appellant Shri Bablubhai Abdulbhai Khan it was found that this appellant is the Proprietor of M/s. Palghar Golden Roadlines with effect from March 2007 before that his father Late Shri Matiullah was the Proprietor of M/s. Palghar Golden Road Lines. However, the appellant was authorized for all the activities on behalf of Palghar Golden Road Lines and his statement dated 30.08.2007 was recorded wherein he has admitted regarding issuance of blanks LRs. Therefore, he was directly involved in the overall offence of facilitating wrong availment of credit to M/s. Shree Ram Tubes Pvt Ltd. For imposition of penalty under Rule 26 the status of the person is not relevant whereas if any person is involved in any capacity for evading of duty or wrong availment of cenvat credit his offence is punishable under Rule 26 of Central Excise Rules, 2002 - merely because he was not the proprietor of Palghar Golden Roadlines at the relevant time but he was otherwise actively involved in the modus operandi of wrong availment of Cenvat credit by M/s Shree ram Tubes Pvt Ltd. All the appellant having direct and active role in entire modus operandi of wrong availment of cenvat credit by M/s. Shree Ram Tubes Pvt Ltd, particularly when M/s. Shree Ram Tubes Pvt Ltd has admitted the liability of wrongly availed cenvat credit. Therefore, the penalties imposed on the appellant is correct hence, the same is upheld. Appeal dismissed.

Summary

Issues:
Penalties imposed under Rule 26 of Central Excise Act, 2002 on various appellants for abatement in the offence of fraudulent availment of cenvat credit by M/s Shree Ram Tubes Pvt Ltd.

Analysis:
1. Appellant: Shri Bablubhai Abdulbhai Khan
- Issue: Appellant's involvement in facilitating clandestine clearance of goods.
- Analysis: Appellant facilitated M/s Shree Ram Tubes to evade duty, penalty imposed under Rule 26. Argument made regarding the appellant not being the proprietor at the relevant time was dismissed as he was actively involved in facilitating the wrong availment of credit, justifying the penalty.

2. Appellant: Nissan Copper Ltd, Shri Sanjay S Maradia, Shri Vinod Bhadra
- Issue: Allegations of issuing job work challan and cenvatable invoice for fraudulent cenvat credit.
- Analysis: Appellants involved in not physically transporting goods but passing documents only, creating fake firms for transportation. Penalties rightly imposed under Rule 26 due to their direct role in facilitating fraudulent cenvat credit to M/s Shree Ram Tubes Pvt Ltd.

3. Appellant: Shri Rampratap Mahadevprasad Sharma
- Issue: Involvement in issuing fake LR for transportation of goods.
- Analysis: Appellant admitted to issuing fake LR without actual transportation of goods, aiding in fraudulent availment of cenvat credit. Penalty upheld under Rule 26 for active participation in the fraudulent scheme.

4. Appellant: Shri Satish B Agarwal
- Issue: Involvement in arranging issuance of fake LRs.
- Analysis: Appellant arranged for issuance of fake LRs without actual transportation, aiding M/s Shree Ram Tubes in fraudulent cenvat credit. Penalty justified under Rule 26 for direct involvement in the scheme.

5. Quantum of Penalty
- Issue: Justification of penalty amount imposed.
- Analysis: Penalty amount considered reasonable in relation to the duty involved, no scope for reduction. Tribunal cited a similar case where penalty under Rule 26 was upheld, emphasizing the correctness of the penalties imposed.

6. Overall Decision
- Issue: Upholding or setting aside penalties imposed on appellants.
- Analysis: All appellants found to have direct and active roles in the fraudulent scheme of cenvat credit availment by M/s Shree Ram Tubes. Penalties upheld as correct due to their involvement, especially when M/s Shree Ram Tubes admitted liability. Appeals dismissed, penalties upheld.