Punjab-Haryana High Court
M/S M.S.Metals vs Commissioner Of Central Excise on 24 January, 2014
Author: Ajay Kumar Mittal
Bench: Ajay Kumar Mittal, Anita Chaudhry
CEA No.96 of 2013 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CEA No.96 of 2013
Date of decision: 20.01.2014
M/s M.S.Metals
......Appellant
Vs.
Commissioner of Central Excise, SCO 407-408, Sector 8, Panchkula,
Haryana.
.....Respondent
CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
HON'BLE MS. JUSTICE ANITA CHAUDHRY
Present: Mr. Deepak Gupta, Advocate for the petitioner.
Ajay Kumar Mittal,J.
1. This appeal has been preferred by the assessee under Section 35G of the Central Excise Act, 1944 (in short, "the Act") for quashing the order dated 20.2.2013, (forwarding letter dated 1.3.2013), Annexure A.1 in Excise Appeal No.397 of 2011 (SM) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal") upholding the levy of penalty upon the assessee.
2. A few facts relevant for the decision of the controversy involved, as narrated in the appeal, may be noticed. The appellant was a registered dealer and engaged in trading of zinc ingots. It purchased goods from M/s Kiran Metal, Faridabad who was a registered manufacturer against Singh Gurbax 2014.03.03 12:41 I attest to the accuracy and integrity of this document High Court Chandigarh CEA No.96 of 2013 2 invoice and made payment through banking channels. The appellant sold the goods with invoices to M/s Sonia Overseas, Panchkula. After investigation by the officers of the Central Excise Commissionerate, it was opined that the appellant neither actually received nor supplied goods to others. The appellant only issued invoices and passed on the Cenvat credit without actually delivering the goods. The Department on the basis of this opinion issued show cause notice dated 25.3.2009, Annexure A.2 to the appellant. The appellant submitted reply to the notice. The adjudicating authority passed order dated 31.3.2010, Annexure A.3 vide which 100% penalty under Rule 26(2) of the Central Excise Rules, 2002 (in short, "the Rules") was imposed. Aggrieved by the order, the appellant filed appeal before the appellate authority. The appellate authority vide order dated 16.11.2010, Annexure A.4 upheld the order passed by the adjudicating authority. Still not satisfied, the appellant filed appeal before the Tribunal. Vide order dated 20.2.2013, Annexure A.1, the appeal was dismissed. Hence the present appeal by the appellant.
3. Learned counsel for the appellant submitted that 100% penalty was unjustified. It was further stated that under the rules, imposition of 100% penalty was uncalled for.
4. After hearing learned counsel for the appellant, we do not find any merit in the appeal.
5. The Tribunal vide order dated 20.2.2013 noticed as under:-
"The undisputed facts are that the appellant, a registered dealer, issued bogus invoice without selling any goods to M/s Sonia Overseas on the basis of which M/s Sonia Overseas took the Cenvat Credit. Though specific rule providing for Singh Gurbax 2014.03.03 12:41 I attest to the accuracy and integrity of this document High Court Chandigarh CEA No.96 of 2013 3 penalty for such offences was introduced by inserting sub Rule (2) to Rule 26 of the Central Excise Rules, 2002 w.e.f 1.3.2007, Hon'ble Punjab and Haryana High Court in the case of Vee Kay Enterprises v. CCE (supra), in para 10 of the judgment has held that in such cases in spite of non applicability of Rule 26(2) for the period prior to 1/3/07, penalty can be imposed under rule 25(1) (d) and 26(1) of the Central Excise Rules as the person who purports to sell the goods cannot say that he is not the person concerned in selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. In this regard para 10 of the judgment is reproduced below:-
'10. In spite of non applicability of Rule 26(2) penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation in as much as the appellant claimed to have sold the goods in respect of which the Cenvat Credit was taken. In such a case, Rule 25(1) (d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We, are thus, unable to hold that appellant was not liable to pay any penalty."
7. In my view, just because the show cause notice invoked sub rule (2) of Rule 26 which could not be invoked, invoking of a wrong rule would not initiate, the show cause notice as the show cause notice clearly alleges that the appellant had issued a bogus invoice without supplying any material to enable his customer or Singh Gurbax fraudulently avail the Cenvat Credit and sought imposition of 2014.03.03 12:41 I attest to the accuracy and integrity of this document High Court Chandigarh CEA No.96 of 2013 4 penalty for this offence, which in the view of the judgment of Hon'ble Punjab and Haryana High Court would attract penalty under Rule 25(1) (d) as well as Rule 26(1) of the Central Excise Rules, 2002. In view of this, I do not find any infirmity in the impugned order. The appeal is dismissed."
6. From the above, it emerges that the appellant was a registered dealer who was involved in issuing bogus invoice without selling any goods to M/s Sonia Overseas on the basis of which the said firm took the Cenvat Credit. It was in those circumstances that the penalty of ` 1 lac was imposed under Rule 25(1)(d) and 26(1) of the Rules.
7. Further, in Vee Kay Enterprises v. Commissioner of Central Excise, 2011(266) ELT 436, it was held by this Court as under:-
"10. Inspite of non applicability of rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, rule 25(1)
(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty.
The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty.
11. As regards alternative submission of the appellant, that even if there is jurisdiction to levy penalty equal to the amount of duty evaded distinction in culpability may be found in person who actually evades the duty and the person who enables the same to be done. This distinction in Singh Gurbax 2014.03.03 12:41 I attest to the accuracy and integrity of this document High Court Chandigarh CEA No.96 of 2013 5 culpability may be required to be gone into from case to case. The Tribunal does not seem to have been conscious of this issue."
8. In view of the above, no substantial question of law arises in this appeal and consequently, the same is dismissed.
(Ajay Kumar Mittal)
Judge
January 20, 2014 (Anita Chaudhry)
'gs' Judge
Singh Gurbax
2014.03.03 12:41
I attest to the accuracy and
integrity of this document
High Court Chandigarh