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TMI Blog2016 (11) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... not been disputed by the investigation, therefore the evidences is not conclusive to allege the involvement of the appellants in fraudulent activity of M/s. Singh Inc. Merely because supplier of the goods have committed fraud the buyer of the goods cannot be penalised. It is necessary to establish beyond doubt that the buyer is knowingly involved in the fraud committed by the supplier which in the present case has not been established. Therefore the appellants are not liable for penalty under Rule 26 - Since penalties u/r 26 waived, there is no need to go into the legal issues whether penalty under unamended Rule 26 is imposable for the offence committed prior to 1/4/2007 and also on the issue whether composite penalty can be imposed under Rule 26 and 27 - appeal allowed - decided in favor of appellant. - Appeal No. E/87417, 87753, 87752 and 86855/2014-Mum - Final Order No. A/88196-88199/2016-WZB/SMB - Dated:- 27-6-2016 - Mr. Ramesh Nair, Member(Judicial). Shri. K.I. Vyas, Advocate and Shri. Ravindra Jain, Consultant for the Appellant. Shri. Ashutosh Nath, Asstt. Commissioner(A.R.) for the Respondent. ORDER Per : Ramesh Nair These appeals are directed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal remanded the matter to the Adjudicating authority for a fresh order after affording the appellants the personal hearing and allowing cross examination of the witnesses. In the denovo adjudication, Ld. Commissioner imposed penalties under Rule 26 and 27 on the appellants. As per the Commissioners findings the appellants being merchant exporters have colluded with M/s. Singh Inc. for fraudulent availement of Cenvat credit by M/s. Singh Inc. Ld. Commissioner Contended that the appellants were aware about the fraudulent activity of the M/s. Singh Inc. i.e. fraudulently availment of cenvat credit and by utilizing the same and passing the said amount in the form of payment of duty to the merchant exporters, therefore present appellants were held responsible and accordingly imposed penalties. Aggrieved by the impugned order, all the four appellants are before me. 3. Shri. K.I. Vyas, Ld. Counsel appeared for M/s. Vinayak Exim, M/s. Ashirwad Fashion and M/s. Sheetal Exports and Shri. Ravindra Jain, Ld. Consultant appeared on behalf of M/s. Varun Impex. He submits that on the investigation, the show cause notice and adjudication order dated 21/9/2010 it has been concluded that M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured by M/s Singh Inc. with regard to these goods there is no case whether it is duty paid or otherwise. He submits that since the case here is a fraudulent availment of Cenvat credit by M/s. Singh Inc. without receipt of the inputs and therefore wrongly utilised and shown payment of excise duty on different goods, the goods supplied is not related the Cenvat credit availed and utilised by M/s. Singh Inc. For this reason also the goods so supplied is not liable to confiscation. As per Rule 26 the penalty can be imposed when person deals with any excisable good which he knows, or has reason to believe that goods are liable to confiscation under the Act or Rules. In the present case the department itself established that the goods supplied by M/s. Singh Inc. is not the goods where Cenvat credit was availed and utilised therefore the goods so supplied in respect of which neither cenvat credit was availed nor duty was payable. The department has not investigated whether the goods so supplied were otherwise duty paid or not therefore dealing with the goods which was not related to the fraudulent Cenvat credit, is not liable for confiscation, accordingly, penalty under Rule 26 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. placed reliance on following judgments: (a) M.S. Metals Vs. Commissioner of Central Excise, Haryana [2014(309) ELT 241(P H)] (b) Dewan Brothers Vs. Union of India[2014-TIOL-1469-HC-AHM-CX] He further submits that regarding the composite penalty under Rule 26 and 27 Hon ble Supreme Court has time and again held that wrong quoting of statutory provision does not vitiate the entire proceeding, if the offence is otherwise established. In this regard he placed reliance on judgments in the case of J.K. Steel Ltd. Vs. Union of India [1978(2) ELT J355(S.C.)] 4. I have carefully considered the submissions made by both sides. 5. I find that as regard the issue, that M/s. Singh Inc. availed Cenvat credit fraudulently and utilisation thereof, has attained finality as per the adjudication order dated 21/9/2010 as no appeal was filed by the party against the said order. In the present case proceedings the only issue to be decided is whether the appellants being merchant exporters are liable for penalty under Rule 26 in connection with the offence committed by M/s. Singh Inc. From the analysis of the facts and evidences gathered by investigation, it is to be ascertained that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the evidences is not conclusive to allege the involvement of the appellants in fraudulent activity of M/s. Singh Inc. I have gone through one order on the identical issue in the case of Babul Jain and Others Vs. Commissioner of Central Excise Thane-I passed by this Tribunal vide order NO. A/3314-3329/15/EB dated 16/7/2015 wherein the identical facts were existing. In that case penalty was imposed under Rule 26 on various similar placed persons but on the clear evidences that against the transaction the invoice amount though initially paid by cheque but subsequently it was reversed by cash payment or the cheque payment was made to some different person which is not the case here. In the same case, in case of one of the party, since no such evidences of cash payment or similar transactions were available, the said party was absolved from the penalty under Rule 26. The relevant findings of the division bench of this Tribunal is reproduced below: 9. Appeal No. E/723/10: The appellant in the present case is a merchant exporter. From the investigation statements made by Shri. Babul Jain, partner of Rainbow Silks and other details as discussed in the impugned order, it appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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