2013 (11) TMI 1020 - AT - Central Excise

Demand u/s 11D Whether the assessee had issued bogus invoices for 3% commission without supply any goods - Held that - This section is applicable to the manufacturer who has collected some amount from his customers as duty in respect of certain goods sold by him and that amount collected as duty has not been paid to the Government - When no goods have been supplied against the invoices and except for 3% commission, the appellant have not received any thing, there is no question of the appellant having received any amount towards duty which was not paid by them to the Government - Just because the invoices were issued by the appellant to M/s. Polymermann Asia Pvt. Ltd. showing sales of duty paid capital goods, it cannot be presumed that they had received the payment against those invoices when the evidence on record shows otherwise order of the Commissioner (Appeals) set aside Decided in favour of Assessee. Imposition of penalty under Rule 173Q(1)(bbb) of Central Excise Rules 1944 for issue a fake invoices Held that - Rule 173Q(1)(bbb) provided for imposition of penalty on any manufacturer, producer, a registered person of a Ware House or registered dealer, who willfully enters any wrong or incorrect particulars in the invoices issued for the excisable goods dealt by him with intent to facilitate the buyer to avail credit of the duty of excise in respect of such goods, which is not permissible under the Rules - issue of fake invoice of capital goods by M/s. MGM Tools Pvt. Ltd. would be covered by Rule 173Q(1)(bbb) - appellant s plea that during the period of dispute there was no provision for imposition of penalty on any manufacturer for issue a fake invoice, is not correct Thus, Penalty under Rule 173Q(1)(bbb) of Central Excise Rules 1944 upheld Decided against Assessee. Penalty on Director of appellant company under Rule 209A of Central Excise Rules Held that - He was also involved in issue of fake invoices Following Vee Kay Enterprises Vs. CCE 2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT - penalty is imposed under section 26 of Central Excise Rules 2001/2002 analogous to Rule 209 A of Central Excise Rules, 1944 for issue of fake invoices - The appellant issued invoices without delivery of goods with intent to enable evasion of duty Thus the director of the company would be liable to pay penalty Decided against Assessee.

Summary

Issues:
1. Demand under section 11D on M/s. MGM Tools Pvt. Ltd.
2. Imposition of penalty on M/s. MGM Tools Pvt. Ltd. and its directors for issuing fake invoices.

Analysis:

Issue 1: Demand under section 11D on M/s. MGM Tools Pvt. Ltd.
The case revolved around M/s. MGM Tools Pvt. Ltd. allegedly issuing fake invoices to M/s. Polymermann Asia Pvt. Ltd. for capital goods without actually supplying any goods, enabling the latter to avail Cenvat Credit. The Assistant Commissioner confirmed a demand of Rs. 7,92,702 under section 11D against M/s. MGM Tools Pvt. Ltd. The Commissioner (Appeals) upheld this order, leading to appeals being filed. However, the Tribunal remanded the matter back to the Commissioner (Appeals) for a fresh decision. The Commissioner (Appeals) subsequently upheld the original order. The appellant argued that no duty amount was recovered by them, as the invoices were fake and no goods were supplied. The Tribunal agreed, setting aside the demand under section 11D, as there was no evidence of duty amount collection by M/s. MGM Tools Pvt. Ltd.

Issue 2: Imposition of penalty on M/s. MGM Tools Pvt. Ltd. and its directors for issuing fake invoices
Regarding the imposition of penalties for issuing fake invoices, the Tribunal found that during the relevant period, Rule 173Q(1)(bbb) allowed penalties for providing incorrect details in invoices to facilitate duty credit for buyers. The Tribunal upheld the penalty on M/s. MGM Tools Pvt. Ltd. under this rule. Additionally, the Tribunal upheld the penalty on the director of the company under Rule 209A of the Central Excise Rules, as he was involved in issuing fake invoices. The argument that there was no provision for such penalties during the disputed period was dismissed, citing a relevant judgment. Consequently, while setting aside the demand under section 11D, the Tribunal upheld the penalty on the director of M/s. MGM Tools Pvt. Ltd.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both sides, and the Tribunal's findings, ensuring a detailed understanding of the legal aspects involved in the case.