2023 (12) TMI 304 - AT - Central Excise

Availment of CENVAT credit fraudulently without actually receiving the goods in the factory - denial of relief for penalty as provided under SVLDR Scheme - declaration as required under the SVLDR Scheme not made - HELD THAT - It is clear from the provision of Section 124 that the applicants are eligible for relief of entire penalty or late fee. Now the question arises as to whether the immunity or relief is automatic or is consequent upon the declaration required to be filed by the assessees. The statutory provisions indicate that the appellants are eligible for relief for the entire amount of penalty or late fee. The relief is not subject to the satisfaction of the committee constituted for operationalization of the Scheme as in the case of settlement of duty. Had the appellants filed declarations, the said committee had no role but to give relief as contained in Section 124 - the filing of declaration, more so, in the instant case, where only penalty is involved, remains a procedural issue or a formality. Tribunal and High Courts have been consistently holding that procedural infractions, if any, should not come in the way of a substantial right. Penalty - HELD THAT - Though, no positive act of connivance was evidenced by the above appellants, Commissioner goes on to impose penalty on the appellants - such an order passed without appreciation of the facts and law cannot be sustained. On going through the records of the case, it is seen that no investigation at the end of the transporter/ truck drivers has taken place to falsify the claims of the appellants and to support the allegations by the Department. In the absence of the same, penalty cannot be fastened to the appellants merely because of the fact that there was a fraud committed by the company which procured goods from the appellants. Also, the financial transactions claimed by the appellants have not been negated - penalty cannot be imposed on the appellants. The benefit of the Scheme cannot be denied to the appellants just because they did not file the declaration under SVLDR Scheme - the impugned order cannot be sustained on merits also as far as the imposition of penalty, on the appellants herein, is concerned - Appeal allowed.

Issues involved:
The judgment involves challenges to an impugned order regarding fraudulent availing of CENVAT credit without receiving goods, issuance of show-cause notice for recovery, penalty imposition on suppliers, settlement under Sabka Vishwas Legacy Dispute Resolution Scheme, and appellants' non-application for settlement.

Summary:

Issue 1: SVLDR Scheme Relief Eligibility
The appellants challenge the denial of relief under the SVLDR Scheme due to non-application, arguing that they are entitled to penalty relief as per Tribunal precedents and that the Department's stand on penalty imposition lacks consistency. They assert that penalty cannot be imposed on suppliers for fraudulent activities of the receiver and cite relevant case laws in support.

Issue 2: Contradictory Findings
Counsel for certain appellants contends that the Commissioner's findings are contradictory, as goods were confirmed to have entered the ICC Check Post, yet the conclusion was made that only invoices were issued without goods transport. This inconsistency raises doubts on the imposition of penalties.

Issue 3: SVLDR Scheme Provisions
The Department emphasizes the mandatory nature of filing declarations under the SVLDR Scheme, highlighting that relief is contingent upon fulfilling declaration requirements. Failure to submit declarations precludes appellants from claiming benefits under the Scheme, as clarified by CBIC FAQs.

Issue 4: Merits of the Case
The Department presents a strong case against the appellants, citing verification results at the ICC Check Post and implicating various entities in the alleged fraudulent activities. The Department argues that penalty imposition is justified under Rule 26 of Central Excise Rules, 2002, and relies on relevant case laws to support its stance.

Issue 5: Scheme Relief and Procedural Compliance
The Tribunal examines the provisions of the SVLDR Scheme and concludes that appellants are eligible for relief from penalties or late fees. The filing of declarations is viewed as a procedural formality, and failure to file should not impede the appellants' entitlement to relief, as supported by previous Tribunal decisions.

Issue 6: Merits Reassessment
Upon reviewing the case merits, the Tribunal finds discrepancies in the Commissioner's conclusions, particularly regarding the lack of evidence against certain appellants and the imposition of penalties based on non-existent legal provisions. The Tribunal rules in favor of the appellants, allowing their appeals and questioning the validity of penalties imposed.

Conclusion:
The Tribunal rules in favor of the appellants, granting relief under the SVLDR Scheme and overturning the penalties imposed. The judgment highlights the importance of procedural compliance and consistency in legal interpretations, ultimately leading to the allowance of all appeals.

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