2019 (3) TMI 1419 - AT - Central Excise

CENVAT Credit - Credit availed on the strength of the invoices issued by M/s. Shah Foils Ltd., without receipt and use of the inputs for intended purpose in the factory premises - amount reversed alongwith interest - benefit of reduced penalty - Held that - The appellant is the partner of M/s. Magma Industries - On perusal of the case records, it is found that the appellant had played active role in availment of wrong Cenvat Credit by Magma Industries. Thus, imposition of penalty under Rule 26 of the rules on him is justified - However, considering the fact that the adjudication order had imposed penalty of 25% of duty on the partnership firm M/s. Magma Industries, the benefit of reduced amount of penalty should also be available to the appellant, being the partner of the said partnership firm. The appellant should be provided with the option to pay reduced amount of penalty - Appeal disposed off.

Summary

Issues:
Fraudulent availment of Cenvat Credit, imposition of penalty under Rule 26 of the Central Excise Rules, 2002, applicability of reduced penalty amount, partnership firm's liability, benefit of reduced penalty for the appellant.

Analysis:
The appeal was filed against the order passed by the Commissioner of CGST and Central Excise (Appeals) regarding the fraudulent availment of Cenvat Credit by M/s. Magma Industries based on invoices from M/s. Shah Foils Ltd. without receipt and use of inputs for the intended purpose. The appellant, a partner of Magma Industries, was also implicated in the case. The original order imposed a penalty of ?11,28,706 on the appellant, which was upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

The appellant argued for the benefit of reduced penalty, citing a Tribunal decision in a similar case. On the contrary, the Authorized Representative for the respondent supported the original order's findings, justifying the penalty imposed on the appellant due to their active role in the fraudulent Cenvat Credit availment. Legal precedents were cited to reinforce the respondent's stance on the penalty issue.

After hearing both sides and examining the records, the Tribunal acknowledged the appellant's involvement in the wrongful Cenvat Credit availment but also noted that the partnership firm, Magma Industries, had already been penalized with a reduced penalty amount. Therefore, the Tribunal decided that the benefit of the reduced penalty should also be extended to the appellant as a partner of the firm, considering the circumstances and precedents cited. The Tribunal differentiated the present case from the legal judgments referenced by the respondent based on the specific facts and issues involved.

Consequently, the Tribunal modified the impugned order by reducing the penalty amount to 25% of the duty demand, i.e., ?11,28,706. The appellant was granted the option to pay the reduced penalty within 30 days from the receipt of the order. The appeal was disposed of accordingly, providing relief to the appellant in terms of the penalty amount.

(Operative part pronounced in Court)