2018 (1) TMI 150 - AT - Central Excise

CENVAT credit - forged documents - redemption fine - penalty - Held that - On investigation conducted at the end of Shiv Traders, he clarified that the invoice in question, has not been issued by their firm and the same has been forged by them. Further investigations were conducted at the end of the transporter and it came to light that even the GR stands forged by the assessee. - confiscation justified. The total duty involved in the matter was to the extent of ₹ 97,000/-, thus, not justifying the redemption fine of ₹ 2,00,000/- - Appreciating that the duty was on the lower side, redemption fine reduced from ₹ 2,00,000/- to ₹ 1,00,000/-. Penalty - Held that - the same stands imposed under the provisions of Rule 26 of the Central Excise Rules, which provide maximum penalty equivalent to the duty amount involved. As such imposition of penalty of ₹ 3,00,000/- on the appellant is neither warranted nor justified. The same is accordingly reduced to ₹ 97,445/-. Appeal allowed in part.

Summary

Issues: Denial of Cenvat Credit, Confiscation of Goods, Imposition of Penalty

Denial of Cenvat Credit:
The appellant was denied the benefit of Cenvat Credit amounting to ?97,445 on the basis of forged invoices from M/s Shiv Traders. Investigations revealed that the invoices and the goods' receipt were forged. The Original Adjudicating Authority upheld the denial of credit, leading to an appeal. The Commissioner(Appeals) did not interfere with the duty demand but reduced the redemption fine from ?6,50,000 to ?2,00,000. The appellant did not contest the duty confirmation but challenged the quantum of the redemption fine and penalty.

Confiscation of Goods:
Along with the denial of Cenvat Credit, the goods were confiscated with an option for the appellant to redeem them by paying a redemption fine of ?6,50,000. The Commissioner(Appeals) reduced the redemption fine to ?2,00,000, considering the duty amount involved. The appellant appealed against the high redemption fine imposed.

Imposition of Penalty:
A penalty of ?3,00,000 was imposed on the appellant under Rule 26 of the Central Excise Rules, 2002, which allows a penalty equivalent to the duty amount involved. The Tribunal found the penalty amount excessive and reduced it to ?97,445, equivalent to the duty amount. The appellant's challenge was successful in reducing both the redemption fine and the penalty, aligning them with the duty amount involved.

In conclusion, the Tribunal upheld the denial of Cenvat Credit but reduced the redemption fine from ?2,00,000 to ?1,00,000 and the penalty from ?3,00,000 to ?97,445, aligning them with the duty amount involved. The appeal was rejected except for the reduction in the quantum of the redemption fine and penalty, which were adjusted accordingly.