2013 (11) TMI 878 - AT - Central Excise

Penalty under Rule 26(1) of Central excise rules 2002 - Bogus Cenvatable invoices issued - Held that - Even during period prior to 01.03.07 penalty could be imposed on a registered dealer for issue of bogus cenvatable invoices without supplying any goods, under Rule 25(i)(d) and 26 of Central Excise Rules, 2002 - Following Vee. Kay. Enterprises Vs. Commissioner of Central Excise 2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT - Inspite of non-applicability of Rule 26(2), penalty could be levied as the assesse was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as they claimed to have sold the goods in respect of which the Cenvat Credit was taken - In such a case, Rule 25(1)(d) and 26(1) are also applicable - The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty - The assesse issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged the appellant was liable to pay penalty Decided in favour of Revenue.

Summary

Issues:
Allegations of issuing bogus invoices for Cenvat Credit without supplying goods, imposition of penalty under Rule 26 of Central Excise Rules, 2002 prior to 01.03.07.

Analysis:
The case involved the respondent, a second stage registered dealer accused of issuing invoices to manufacturers without actually selling any goods, enabling the manufacturers to avail Cenvat Credit without supply. The Cenvat Credit passed on was Rs. 56,971/- and 88,671/-. The Assistant Commissioner confirmed the Cenvat Credit demands and imposed penalties equal to the amount passed on. However, the Commissioner (Appeals) set aside the penalties citing the absence of specific provisions for penalty imposition before 01.03.07. The Revenue filed appeals against the Commissioner (Appeals) orders.

During the proceedings, the respondent did not appear, leading to an ex-parte decision. The Revenue argued that penalties could be imposed on registered dealers for issuing bogus invoices under Rule 25(i)(d) and 26 of Central Excise Rules, 2002 even before 01.03.07. The respondent had issued invoices without supplying goods, confirmed by statements from a first stage dealer. The Commissioner (Appeals) set aside penalties due to the lack of specific provisions before 01.03.07. However, referencing the Hon'ble Punjab & Haryana High Court judgment, it was noted that penalties could be levied even without Rule 26(2) if the dealer was involved in selling goods liable to confiscation.

Based on the High Court ruling, it was concluded that the penalties were justified. The impugned order setting aside penalties was deemed unsustainable, and the Original Adjudicating Authority's orders were restored. Consequently, the Revenue's appeals were allowed.