2010 (5) TMI 276 - AT - Central Excise

Registration, cancellation of, retrospectively - M/s. Sidh Industries, were issued registration certificate on 6-12-05 by the Dy. Commissioner, Central Excise, Mandigobindgarh as a registered dealer. Premises taken on rent but vacated within six months. Evidence showing that ever since firm given registration they neither had any office nor any premises nor maintaining any account. Registration cancelled. Held that- registration rightly cancelled as continuing same would encourage mal practice like issue of bogus invoices without selling any goods. Inconceivable how registered dealer can do business without having any office or premises, godown and without maintaining prescribed account.

Summary

Issues:
Cancellation of registration certificate for non-intimation of change of address and imposition of penalty under Rule 26 of Central Excise Rules, 2002.

Analysis:
The case involved the cancellation of a registration certificate issued to a firm dealing in iron steel items due to non-operation from the registered premises and failure to notify a change of address. The firm had been granted registration in December 2005, but evidence showed they had vacated the premises within six months of obtaining the certificate. The partners of the firm were summoned, and discrepancies were found regarding the operation address, maintenance of records, and the existence of a business location. The original adjudicating authority canceled the registration certificate with retrospective effect from April 1, 2006, and imposed a penalty of Rs. 10,000 on both partners.

On appeal, the Commissioner (Appeals) upheld the cancellation and penalty. The appellant argued that the cancellation was too harsh for a technical violation and would adversely affect customers who had made purchases based on the registration. The appellant's counsel contended that the retrospective cancellation was unwarranted under the Central Excise Rules. The respondent defended the decision, emphasizing that the firm had never operated from the registered premises, as evidenced by statements from the landlord and neighboring property owner.

The Member (T) carefully considered the submissions and evidence. It was established that the firm had not operated from the registered premises, failed to maintain required records, and did not have a business location. The lack of premises, absence of maintained accounts, and inability to provide a business address raised doubts about the legitimacy of the firm's operations. The Member concluded that continuing the registration would encourage malpractices like issuing bogus invoices without actual sales. Therefore, the cancellation of the registration certificate was deemed appropriate to prevent such fraudulent practices. The appeals were dismissed, upholding the cancellation and penalty imposed by the original adjudicating authority.

This detailed analysis highlights the key issues of cancellation of registration for non-operation from the registered premises and failure to notify a change of address, leading to the imposition of a penalty under Rule 26 of the Central Excise Rules, 2002.