2005 (10) TMI 132 - AT - Central Excise

Summary

Issues involved:
Admission criteria for appeals involving penalties less than Rs. 50,000; Imposition of penalty under Rule 173Q(1)(bbb) of the Central Excise Rules, 1944; Allegations of passing ineligible credit to defraud revenue; Verification of duty paying documents by jurisdictional Superintendent; Retraction of statement during cross-examination; Prima facie case for waiver of pre-deposit of penalties.

Analysis:
The judgment addresses the issue of admission criteria for appeals involving penalties less than Rs. 50,000. The Member (J) notes that while the amount involved in each appeal is below the threshold, the total penalty imposed on the same person across all appeals exceeds Rs. 50,000. Consequently, the appeals are admitted based on this cumulative penalty amount.

Regarding the imposition of the penalty under Rule 173Q(1)(bbb) of the Central Excise Rules, 1944, the advocate representing the applicant argues that the penalty was based on the issuance of modvattable invoices without dispatching materials, which the applicant refutes. The advocate highlights that the penalty was primarily supported by a statement that was retracted during cross-examination before the adjudicating authority. Additionally, the applicant claims to have dispatched materials along with duty paying documents, challenging the allegations.

On the contrary, the learned DR contends that the applicant did not dispatch materials with duty paying documents, accusing them of issuing duty paying documents to customers to defraud revenue by passing ineligible credit. The DR emphasizes that the investigation revealed discrepancies and questions the timing of the statement retraction, suggesting it was an afterthought due to the extended period before retraction.

After considering both submissions, the Member (J) scrutinizes the imposition of the penalty under Rule 173Q(1)(bbb) and the actions of the applicant as a Second Stage Dealer. The Member notes the partial physical control over duty paying document issuance by Second Stage Dealers, requiring verification by the jurisdictional Superintendent. The Member finds it unlikely that the Superintendent would authenticate invoices without proper verification. Moreover, the retraction of the statement during cross-examination is deemed insufficient to dismiss the applicant's case. Consequently, the Member concludes that the applicant has established a strong prima facie case for waiving the pre-deposit of the penalties, leading to a waiver and stay on recovery pending appeal disposal.

In conclusion, the judgment carefully analyzes the imposition of penalties, the authenticity of statements, and the procedural aspects under the Central Excise Rules, ultimately granting relief to the applicant based on the presented evidence and legal considerations.