Custom, Excise & Service Tax Tribunal
Roshan Lal Bhagirathmal vs Kolkata-Ii on 19 February, 2026
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 1
Excise Appeal No. 75096 of 2017
(Arising out of Order-in-Original No. 20/COMMR/CE/KOL-II/Adjn/2016-17 dated
26.09.2016 passed by the Commissioner, Kolkata-II Central Excise Commissionerate,
M.S. Building, Custom House, 15/1, Strand Road, Kolkata - 700 001)
M/s. Roshan Lal Bhagirathmal : Appellant
1, Riverside Road, Shalimar,
Howrah - 711 101
VERSUS
Commissioner of Central Excise : Respondent
Kolkata-II Commissionerate,
M.S. Building, Custom House, 15/1, Strand Road,
Kolkata - 700 001
APPEARANCE:
Shri N.K. Chowdhury, Advocate, for the Appellant
Ms. Suman, Authorized Representative, for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 75268 / 2026
DATE OF HEARING / DECISION: 19.02.2026
ORDER:[PER SHRI ASHOK JINDAL] The appellant is in appeal against the impugned order for imposition of penalty under Rule 26(2) of the Central Excise Rules, 2002.
2. The facts of the case are that the appellant is a partnership firm, engaged in the trading of iron and steel products. The appellant obtained Central Excise Dealer's Registration Certificate. They were purchasing goods from manufacturers and certain dealers, supplying the goods to different manufacturers / consignees either directly or through middlemen / buyers and passing on the credit to the Page 2 of 8 Appeal No.: E/75096/2017-DB manufacturers. The said manufacturers / consignees of the goods availed CENVAT Credit on receiving the goods, on the strength of invoices issued by the dealers.
3. On the basis of purported information, officers of the Department conducted investigation, by recording the statement of Shri Dinesh Dalmia, Partner of the appellant-firm, on 14.08.2013, wherein he has stated that they were procuring goods from different manufacturers like M/s. Steel Authority of India Limited, M/s. BMW Industries Ltd., M/s. Surya Alloys Industries Ltd., M/s. Hooghly Alloys & Steel Industries Ltd., M/s. Shree Parasnath Re Rolling Mills Ltd. and M/s. Baba Smelters Pvt. Ltd.; that they were receiving orders from different buyers and at the instance of the buyers / middlemen, they supplied the goods directly to the consignees by issuing central excise invoices mentioning therein the name of the buyer / middleman as well as the consignee; that the consignee was also making payment to the buyers / middlemen and the buyers / middlemen were making payments to the trader / appellant.
3.1. During the course of investigation, statement in relation to one middleman / buyer, namely, M/s. R.K. Steel & Company, Belur, was recorded, wherein Shri Mathur Bangal, Accountant of the said firm, on 18.11.2013, inter alia stated that the goods were directly delivered to the consignee's place at their instance.
3.2. On 05.12.2013, the statement in respect of another middleman / buyer, viz., M/s. D.S. Trading Co., Kolkata was recorded wherein Shri Ambika Pahar, Accountant of the said firm, also stated the same thing, by recording that they had taken delivery of the Page 3 of 8 Appeal No.: E/75096/2017-DB goods purchased from the appellant, but the same were not unloaded at their godown but directly delivered to the consignee's place (godown).
3.3. The investigation was also done at the end of the consignees. Statement was recorded from Shri Gopal Patra, Accountant of M/s. Binayak Hi-Tech Engineering Ltd., Howrah (one of the consignees) who, in his statement dated 20.11.2013, inter alia stated that they had received the inputs from the appellant through certain buyers and took CENVAT Credit on such inputs; that the goods were supplied directly from the place of M/s. Roshan Lal Bhagirathmal (appellant herein) to their place.
3.4. On the same date, another consignee, namely, M/s. S.K. Engineering, Santragachi, also stated that they have received the goods directly from the appellant as per the order of the middlemen / buyers.
4. Despite that, it was inferred that there was no sale of goods between the dealer and the consignee and that the appellant could not avail CENVAT Credit or pass on the same to the manufacturers. Accordingly, the appellant was directed to show cause as to why penalty under Rule 26(2) of the Central Excise Rules, 2002 should not be imposed.
4.1. The matter was adjudicated and penalty under Rule 26(2) of the said Rules was imposed on the appellant.
4.2. Aggrieved from the said order, the appellant is before us.
Page 4 of 8Appeal No.: E/75096/2017-DB
5. The Ld. Counsel appearing on behalf of the appellant submits that there is no evidence on record that the consignees had not received the goods; hence, the question of invocation of Rule 26(2) of the Rules does not arise in this case. To support his contentions, he relied on various decisions which are as follows: -
• Kunststoff Polymers Ltd. v. Commissioner of C. Ex., Bhopal [2009 (247) E.L.T. 546 (Tri.- Del.)] • Hydro Electro Machinery v. Commissioner of C. Ex., Mumbai-III [2017 (345) E.L.T. 314 (Tri.- Mumbai)] • Commissioner of C. Ex., Ahmedabad-II v. Transformers & Rectifiers (India) Ltd. [2012 (281) ELT 670 (Guj.)] • Electrotech Enterprises v. Commissioner of C.G.S.T. & Excise, Kolkata North [Final Order No. 76271/2024 dated 11.07.2024 - CESTAT, Kolkata] • Joya Engineering Industries v. Commissioner of C.G.S.T. & Excise, Kolkata North [Final Order No. 75540/2023 dated 05.06.2023 - CESTAT, Kolkata] • S.S. Engineering Works v. Commissioner of C.G.S.T. & C.X., Kolkata South [Final Order No. 75175/2023 dated 24.03.2023]
6. On the other hand, the Ld. Authorized Representative of the Revenue supported the impugned order.
7. Heard the parties and considered their submissions.
8. It is a fact on record that the appellant, being a dealer, issued invoices showing the name of the consignee / manufacturer and the dealer / buyer through whom they sold the goods. For better appreciation of the facts, a sample copy of one such invoice is extracted hereinbelow: -
Page 5 of 8Appeal No.: E/75096/2017-DB 8.1. On going through the said invoice, it is clear that the manufacturer had sent the goods to the appellant and in terms of that, the appellant issued invoices in the names of the consignee, who was the user of the goods and the buyer, who was the middleman through Page 6 of 8 Appeal No.: E/75096/2017-DB whom the goods were sold by the appellant to the consignee. Payment for the said goods was also received. There is no allegation against the appellant that it was only a paper transaction. In these circumstances, we are of the view that penalty cannot be imposed on the appellant.
8.2. The same issue has been considered by this Tribunal in the case of Electrotech Enterprises v.
Commissioner of C.G.S.T. & Excise, Kolkata North [Final Order No. 76271 of 2024 dated 11.07.2024 in Excise Appeal No. 79744 of 2018 - CESTAT, Kolkata] wherein it has been observed as under: -
"4. I find that the present issue is squarely covered by the decision of the Tribunal in the case of M/s S.S.Engineering Works Vs. Commissioner of CGST & Excise, Kolkata South vide Final Order No.75175/2023 dated 24.03.2023, wherein this Tribunal has observed as under :
"6. Admittedly, there is no dispute that the goods in question have been received by the Appellant in their factory premises and the same were properly recorded in their Books of Account. Even the Invoices in question clearly show the details of the Appellant along with their ECC Number and Central Excise Range and Division etc. The Tribunal in the case of Kunststoff Polymers Ltd. Vs. Commr. of C. Ex., Bhopal -2009 (247) E. L. T. 546 (Tri.- Del.) has held as under:-
4. We have carefully considered the submissions from both the sides and have pursued the records. There is no dispute about the fact that the goods have been procured by the appellant through M/s. Sumitomo Chemicals India Pvt. Ltd. However, from the records, it is seen that M/s. Sumitomo Chemicals India Pvt. Ltd. had placed the order for the goods with M/s. SC Enviro Agro India Pvt. Ltd., a second stage dealer who supplied the goods directly under their invoices to the appellant, mentioning the appellant's name as the consignee while at Page 7 of 8 Appeal No.: E/75096/2017-DB the same time mentioning M/s. Sumitomo Chemicals India Pvt. Ltd. as the customer. It is on this basis that Cenvat credit has denied to the Appellant in respect of these Invoices.
5. As per Rule 7(1) of the Cenvat Credit Rules, 2002, the Involces Issued by a first stage dealer or a second stage dealer are valid documents for taking Cenvat credit. In this case, there is no dispute about the fact that M/s. SC Enviro Agro India Pvt. Ltd., who had Issued the Invoices and on the basis of which the Cenvat credit was taken by the appellant, are a second stage dealer. We find that Tribunal in the case of Malwa Cotton Spg. Mills Ltd. v. CCE, Chandigarh (supra), relying upon the Board Circular No. 96/7/95-CX dated 13- 2-95 has held that "mere mention of the words 'on account of the dealer' on the invoices or the name of the dealer on the invoice, in itself, would not make the invoices ineligible documents for availing Modvat credit", so far as the goods have been directly received in the user's premises. Similar view Excise Appeal No. 79200 of 2018 3 has been taken by the Tribunal in the case of Prakash Cotton Mills Ltd. v. CCE, Bombay (supra), wherein the Tribunal held that in a situation where the inputs were received from a manufacturer I but through a dealer, the Cenvat credit cannot be denied so long as the co-relation between goods received by the user manufacturer from the dealer under the dealer's invoice can be established with the goods received by the dealer from the manufacturer. This judgment of the Tribunal has been followed in the cases of Beepee Coatings Ltd. v. CCE, Vadodara reported in 1997 (92) E.L.T. 223 (Tri.-Bom.) and Ashok Leyland Ltd. v. CCE, Chennal reported in 2003 (161) E.L.T. 710 (Tri.-Chennai). In this case it is not the case of the Department that the goods were not received directly by the appellant from a second stage dealer M/s. SC Enviro Agro India Pvt. Ltd. In view of these circumstances, just because the invoices issued by M/s. SC Enviro Agro India Pvt. Ltd.
mention M/s. Sumitomo Chemicals India Pvt. Ltd. as the customer, while at the same time mentioning the appellant as the consignee, will not become invalld document for taking Page 8 of 8 Appeal No.: E/75096/2017-DB Cenvat credit, we therefore, hold that the impugned order is not sustainable. The same is set aside and the appeal is allowed. (emphasis supplied)'.
7. The facts of the present case are similar. Therefore, respectfully following this decision, I hold that the Appellant is eligible for the Cenvat Credit and allow the Appeal with consequential relief."
5. As the issue is covered by the decision of the above cited case, therefore, I allow the cenvat credit to the appellant. Therefore, I do not find any merit in the impugned order and the same is set aside.
6. In the result, the appeal is allowed with consequential relief, if any."
8.3. As the issue is covered by the decision cited in the case of Electrotech Enterprises (supra), we do not find any merit in the reasoning in the impugned order for imposition of penalty on the appellant under Rule 26(2) of the Central Excise Rules, 2002.
9. In view of this, we set aside the impugned order qua imposing penalty on the appellant under Rule 26(2) of the Central Excise Rules, 2002.
10. In the result, the appeal is allowed, with consequential relief, if any.
(Operative part of the order was pronounced in open court) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd