2024 (7) TMI 468 - AT - Central Excise

Levy of penalty on appellant, a Proprietary firm - involvement in illegality by not receiving goods and receiving invoices only with an intension to avail CENVAT credit and clearing goods without payment of duty - main appellant has settled the dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019 - HELD THAT - The Appellant had not supplied goods as per invoices on the presumption that there was shortage of raw material in the factory of the Consignee M/s KEPL. But the discrepancy in the stock of goods in the factory of M/s KEPL cannot lead to any adverse inference against the Appellant since it can be due to many reasons and not attributable only to the Appellant, amongst all the suppliers. M/s KEPL has made payments by Cheques for the goods supplied under 18 invoices. Moreover Respondent has not disputed the contents of RG 23D Register maintained by the Dealer and the quarterly CENVAT returns submitted to the respondent as required under the Sub-Rule (8) of Rule 9 of the CENVAT Credit Rules, 2004 showing the details of availing of credit on purchase of goods and passing of credit on sale of goods. Considering the above facts and the fact that the main appellant has settled the dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019 which allows waiver of interest and penalty to the co-notice if the duty is discharged by the main notice, there are no merit to sustain the penalty against the appellant who is a co-notice. Appeal is allowed by setting aside the penalty imposed on the appellant.

Summary

Issues:
Challenge to penalty imposed on the appellant.

Analysis:
The appellant, a Proprietary firm engaged in trading, challenged the penalty imposed on them for alleged involvement in illegality related to not receiving goods and clearing goods without payment of duty. The proceedings were initiated against another party, M/s KEPL, and the appellant was issued a show cause notice (SCN) based on the same. The appellant submitted a detailed reply and produced evidence to support their contentions. However, the adjudicating authority found an omission on the part of the appellant and imposed a penalty, leading to the present appeal.

During the hearing, the appellant's counsel argued that the statement relied upon by the adjudicating authority was retracted, and there was no finding based on evidence that the appellant did not supply goods as per invoices. The counsel emphasized that the shortage of raw material at the consignee's factory should not lead to adverse inferences against the appellant, as discrepancies could have various reasons. The counsel also highlighted that the appellant's compliance with maintaining records and submitting CENVAT returns was not disputed by the respondent.

The appellant's counsel further contended that the show cause notice did not invoke a specific clause applicable to the dealer, and since the dealer was not liable to pay excise duty, there was no intention to evade payment of duty. The counsel cited relevant judgments and a CBEC Circular to support their arguments. Additionally, the counsel mentioned that the dispute fell under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, and the main accused had settled the matter.

The Departmental Representative reiterated the findings of the adjudicating authority, but the Tribunal observed that the discrepancy in the consignee's stock could not solely implicate the appellant. Considering the appellant's compliance and the settlement of dues by the main accused under the Sabka Vishwas Scheme, the Tribunal found no merit in sustaining the penalty against the appellant. Consequently, the appeal was allowed, setting aside the penalty imposed on the appellant with any consequential relief in accordance with the law.