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2024 (3) TMI 1099 - AT - Central ExciseLevy of penalty u/r 25 of CER - Availment of fraudulent credit - issuance of Cenvatable invoices without actual dispatch of goods - Penalty on Registered Dealers - Penalty on Unregistered Dealers and Transporters - HELD THAT - The adjudicating authority finds that the charge levelled against the respondents was that they have facilitated and abetted M/s AIPL in availing fraudulent credit; a careful consideration of type of offences indicates that that the circumstances covered fall under Rule 26(2) of Central Excise Rules, 2004 introduced w.e.f. 01.03.2007 and therefore, penalty cannot be imposed under Rule 25 of Central Excise Rules, 2004. Only for the reason that the offence relating to imposition of penalty for issuing Cenvatable invoices without supply of goods is made an offence specifically from 01.03.2007, it cannot be concluded that there was no provision in the rules for imposition of penalty for such offence before 01.03.2007. It is found that a bare reading of the provisions gives a clear understanding that even before the amendment Rule 26 provided for imposition of penalty in the cases where the dealer did not account for the excisable goods or in cases of contravention of provisions of the Act and the Rules. It cannot be said that the dealers have accounted for the rules in a proper manner and did not contravene any provisions of law - The very fact that they have issued invoices in the name of M/s AIPL facilitating them to avail Cenvat credit while they have removed the goods elsewhere is a proof in itself that they did not account for the excisable goods properly and have violated the provisions of Rule 9 of Central Excise Rules, 2004. Now, the question that comes is as to whether such non-accountal and contravention of provisions is with an intent to evade payment of duty. It is on record that the dealers are registered. They are aware of the provisions of law relating to issuance of invoices. Even then, they have issued Cenvatable invoices in the name of M/s AIPL without ensuring that the goods are also consigned to M/s AIPL. A positive act evidencing the intent to evade payment of duty is in the form of issuing Cenvatable invoices. Therefore, the dealers had contravene the provisions of rules with intent to evade payment of duty and they have rendered themselves liable to pay penalty under Rule 25 even before the insertion of sub-Section (2) under Rule 26. Coming to the case of the transporters, they have not only confirmed the fact that the goods consign to M/s AIPL were transported upto Delhi and in no case were transported to M/s AIPL. Moreover, they have issued transport document evidencing procurement of goods by M/s AIPL - the transporters have also rendered themselves liable to pay penalty under Rule 26 ibid. Even before insertion of sub-Rule 2 under Rule 26 of Cenvat credit Rules 2004, provisions existed for imposition of penalty under Rule 25 for the offence of issuing Cenvatable invoices without movement of goods. Similarly, there is a provision to impose penalty and for confirming a non-existent transportation goods under Rule 26 of Cenvat Credit Rules, 2004 - Revenue has a strong case in their favour and the impugned order cannot be sustained as far as dropping of penalty on respondent dealers/transporters - such penalty leviable on different dealers/transporters should be commensurate with the offence committed and to wipe of the benefit that has accrued to them while working as a deterrent against any such future repetition of the same. The impugned order is modified to the extent of non-imposition of penalty on the respondents - Appeal disposed off.
Issues Involved:
1. Fraudulent availing of Cenvat credit by M/s AIPL. 2. Imposition of penalty on dealers and transporters for issuing Cenvatable invoices without actual dispatch of goods. Summary: Issue 1: Fraudulent Availing of Cenvat Credit by M/s AIPL M/s Annapurna Impex Pvt Ltd. (AIPL) was found to have availed Cenvat credit of Rs. 28,01,76,009/- fraudulently without procuring the goods, engaging only in paper transactions. A show cause notice dated 23.04.2007 was issued to M/s AIPL and its directors, seeking to confirm the demand of fraudulently availed Cenvat credit along with interest, and to impose penalties u/s 11AC, Rule 14, and Rule 15 of Cenvat Credit Rules, 2004. The proposals against M/s AIPL and their directors were confirmed in the order dated 30.12.2008. Issue 2: Imposition of Penalty on Dealers and Transporters Revenue filed appeals against the dropping of penalties on various dealers and transporters who were implicated in issuing Cenvatable invoices without actual dispatch of goods. The adjudicating authority had discharged these noticees, stating that specific penal provisions under Rule 26(2) of Central Excise Rules, 2002, introduced w.e.f. 01.03.2007, were not applicable retroactively. Legal Analysis and Judgment: The Tribunal found that Rule 25 of the Central Excise Rules, 2002, provided for imposition of penalty on any registered dealer for not accounting for excisable goods or contravening any provisions with intent to evade duty. The adjudicating authority had erred in not imposing penalties under Rule 25, as the dealers had issued Cenvatable invoices without actual dispatch of goods, thereby committing fraud. The Tribunal also noted that Rule 26(1) provided for imposition of penalty on any person involved in dealing with excisable goods liable to confiscation. Conclusion: The Tribunal concluded that even before the introduction of Rule 26(2), penalties could be imposed under Rule 25 and Rule 26(1) for issuing Cenvatable invoices without actual dispatch of goods. The impugned order was modified to impose penalties on the respondent dealers and transporters. The penalties imposed are as follows: 1. M/s Classic Alloys: Rs. 25,00,000/- 2. M/s ATCO Products: Rs. 7,00,000/- 3. M/s Himani Traders: Rs. 10,00,000/- 4. M/s Vimla Metal: Rs. 4,00,000/- 5. M/s Ashoka Metal Industries: Rs. 50,000/- 6. M/s KMG International Ltd.: Rs. 10,000/- 7. M/s Dinesh International Limited: Rs. 5,00,000/- 8. M/s Vipin Enterprises: Rs. 2,00,000/- 9. M/s Dev Sons: Rs. 80,000/- 10. M/s Emm Kay Electricals: Rs. 2,00,000/- 11. M/s Millennium Wires (P) Ltd.: Rs. 1,00,000/- 12. M/s Easy Link Trading: Rs. 1,00,000/- 13. M/s Simran Engg. Works: Rs. 50,000/- 14. M/s A.K Industries: Rs. 1,00,000/- 15. M/s Jindal Impex: Rs. 25,000/- 16. M/s Garg Industries Ltd.: Rs. 8,00,000/- 17. M/s N.D. Matel Industries Ltd.: Rs. 3,00,000/- 18. M/s Amarjit & Sons: Rs. 5,000/- 19. M/s Delhi Baroda Road Carrier (P) Ltd.: Rs. 10,000/- 20. M/s Raj Road Carrier: Rs. 10,000/- 21. M/s DMR Cargo Movers (regd): Rs. 10,000/- 22. M/s Super Goods Transport Company: Rs. 10,000/- 23. M/s Nitin Cargo Carriers: Rs. 10,000/- 24. M/s Rama Road Carriers: Rs. 10,000/- 25. M/s Shree Balaji Express Cargo Services: Rs. 10,000/- (Order pronounced in the open court on 22.03.2024)
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