Custom, Excise & Service Tax Tribunal
M/S. Mgm Tools Pvt. Ltd vs C.C.E., Indore on 8 October, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI,
COURT NO. III
Date of Hearing/decision: 08.10.2013
Appeal No. E/72 & 73/2011- EX[SM]
[Arising out of Common Order No. IND/267 to 270/2010, dt. 15/20.09.2010, Passed by Commissioner (Appeals) Central Excise & Customs, Indore]
For approval and signature:
Honble Sh. Rakesh Kumar, Technical Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. MGM Tools Pvt. Ltd. Appellants
Vs.
C.C.E., Indore Respondent
Appearance:
Sh. Jitin Singhal, Advocate - for the Appellants Sh. Rakes Puri, AR- for the Respondent Coram:
Hon'ble Sh.Rakesh Kumar Member (Technical) FINAL ORDER NO._58011-58012/2013 PER RAKESH KUMAR:-
The facts giving rise to those appeals are, in brief, as under:-
1.1 The appellant are manufacturers of flexible pipes and tubes of iron and steel. The allegation against them is that during the period from Nov.09 to Feb.2000 they issued invoices to M/s. Polymermann Asia Pvt. Ltd., Nasik regarding the supply of capital goods valued at about Rs. 59,00,000/- involving duty of Rs.7,92,702/- without actually supplying any goods and only with the purpose of enabling M/s. Polymermann Asia Pvt. Ltd. to avail the Cenvat Credit. On the basis of these invoices, M/s. Polymermann Asia Pvt. Ltd. took Cenvat Credit of Rs. 7,92,702/-. The evidence in support of this allegation against the appellant is:-
(a) Admitted fact that the type of capital goods which are claimed to have been sold by the appellant to M/s. Polymermann, are not manufactured by them;
(b) Statement of their Directors Sh. S.N.Godia and Sh. Dilip Mehta wherein they admitted that the invoices issued by them to M/s. Polymermann Asia Pvt. Ltd. are fake invoices without supply any goods and that the payment received from M/s. Polymermann Asia Pvt. Ltd. had been returned after deducting their commission which was about 3%; and
(c) Enquiry with the transporters who also confirmed that no goods has been transported and only bogus invoices have been issued.
1.2 A Show Cause Notice based on the above evidence, was issued to M/s. MGM Tools Pvt Ltd. and M/s. Polymermann Asia Pvt. Ltd., Nasik, Sh. G.N.Godia and Sh. Dilip Mehta Directors of M/s. MGM Tools Pvt Ltd. for:-
(a) Recovery of an amount of Rs. 7,92,702/- from M/s. MGM Tools Pvt. Ltd. under section 11D on the basis that this much amount has been collected by them from M/s. Polymermann Asia Pvt. Ltd. as duty, but the same has not been paid to the Government; and
(b) Imposition of penalty under Rule 25 and 26 of Central Excise Rules on M/s. MGM Tools Pvt. Ltd. and its director Sh. Dilip Mehta and Sh. S.N.Godia director of M/s. Polymermann Asia Pvt. Ltd.,Nasik.
1.3 The Show Cause Notice was adjudicated by the Assistant Commissioner vide order-in-original dt. 29.12.2005 by which the demand of Rs.7,92,702/- under section 11D against M/s. MGM Tools Pvt. Ltd. was confirmed and besides this, following penalties were imposed of M/s. MGM Tools Pvt. Ltd. and other notice.
(i) Penalty of Rs. 4,00,000/- (Rupees Four Lakh only) on M/s. MGM Tools Pvt. Ltd. under Rule 25 of Central Excise Rules, 2002 (Erstwhile Rule 173Q of Central Excise Rules, 1944).
(ii) Penalty of Rs. 4,00,000/- (Rupees Four Lakh only) on M/s. Polymermann Asia Pvt. Ltd. under Rule 26 of Central Excise Rules, 2002 (Erstwhile Rule 209A of Central Excise Rules, 1944).
(iii) Penalty of Rs. 1,00,000/- (Rupees One Lakh only) on Sh. Dilip Mehta under Rule 26 of Central Excise Rules, 2002 (Earlier Rule 209A of Central Excise Rules, 1944).
(iv) Penalty of Rs.25,000/- (Rupees Twenty Thousand only) on Sh. S.N.Giodia under Rule 26 of Central Excise Rules, 2002 (Earlier Rule 209A of Central Excise Rules, 1944).
1.4 On appeals being filed to Commissioner (Appeals) the above order of the Assistant Commissioner was set aside in toto vide order-in-appeal dt.15.09.10. Against this order of the Commissioner (Appeals), the Revenue filed appeals before the Tribunal which were disposed of by Tribunal vide Final Order No. 1333-1336/2009-SM [BR] dt. 14.10.09 by which the Tribunal remanded the matter to Commissioner (Appeals) for de-novo decision, after considering the grounds of appeal in the Revenue appeal, as the Commissioner (Appeals) which deciding the appears had not considered the cross-objections filed by the Department.
1.5 The matter was decided by de-novo by the Commissioner (Appeals) vide order-in-appeal dt. 15.09.10 by which the Commissioner (Appeals) upheld the order-in-original dt. 29.12.05. Against this order of the Commissioner (Appeals) these two appeals have been filed by M/s. MGM Tools Pvt. Ltd. and its director Sh. S.N.Godia.
2. Heard both the sides.
3. Sh. Jitin Singhal, learned counsel for the appellant, pleaded that so far as the demand under section 11D is concerned, since the case against M/s. MGM Tools Pvt. Ltd. is that their transaction with M/s. Polymermann Asia Pvt. Ltd., Nasik. were fake transactions and the invoices issued were fake invoices without supply of any goods and except for the 3% commission, no other amount has been received by the appellant, there is no question of recovery of amount under section 11D, as no amount had been recovered by M/s. MGM Tools Pvt. Ltd. as duty from M/s. Polymermann Asia Pvt. Ltd., Nasik, that the only allegation against Sh. S.N.Godia is issue a fake invoice, that during the period of dispute, there was no provision in the Central Excise Rules for imposition of penalty for such offence, that in any case, no penalty can be imposed on Sh. S.N.Godia under Rule 26 as he had not dealt with any excisable goods liable for confiscation and that in view of this, the impugned order is not correct.
4. Sh. Rakesh Puri, learned DR, defended the impugned order by reiterating the findings of Commissioner (Appeals) and pleaded that when the appellant company had issued invoices showing clearance on goods on payment of duty, they had collected the amount including duty from the customer, and this amount would be payable by them to the Government which has not been paid, that this amount would therefore, be recoverable under section 11D, that in view of this, the demand of Rs.7,92,702/- has been correctly upheld by the Commissioner (Appeals) under section 11D, that as regards imposition of penalty of M/s. MGM Tools Pvt. Ltd. for issue of fake invoices, for this offence during the period of dispute the penalty was specifically prescribed under section 173Q(1)(bbb) of the Central Excise Rules 1944, and therefore the Commissioner (Appeals) has correctly upheld penalty on this account on M/s. MGM Tools Pvt. Ltd. As regard the imposition of penalty under Rule 26 of Central Excise Rules on Sh. S.N.Godia, since he was involved in issue of fake invoices, penalty has been correctly imposed on him under Rule 26. He, therefore, pleaded that there is no infirmity in the impugned order.
6. I have considered the submissions from both the sides and perused the records.
7. So far as, the demand under section 11D on M/s. MGM Tools Pvt. Ltd. is concerned, this section is applicable to the manufacturer who has collected some amount from his customers as duty in respect of certain goods sold by him and that amount collected as duty has not been paid to the Government. In this matter, the case against MGM Tools Pvt. Ltd. is that they have issued bogus invoices for 3% commission without supply any goods just to enable his customer M/s. Polymermann Asia Pvt. Ltd., Nasik avail Cenvat Credit and this fact is confirmed not only by the statement of the Directors of the appellant company Sh. S.N.Godia and Sh. Dilip Mehta,but also by the evidence of the transporters. When no goods have been supplied against the invoices issued to M/s. Polymermann Asia Pvt. Ltd. and except for 3% commission, the appellant have not received any thing, there is no question of the appellant having received any amount towards duty which was not paid by them to the Government. Just because the invoices were issued by the appellant to M/s. Polymermann Asia Pvt. Ltd. showing sales of duty paid capital goods, it can not be presumed that they had received the payment against those invoices when the evidence on record shows otherwise. In view of this so far as the demand under section 11D is concerned, the order of the Commissioner (Appeals) is not sustainable.
8. However, so far as the imposition of penalty for issue a fake invoices on both the appellant concerned, I find that during the period of dispute, Rule 173Q(1)(bbb) provided for imposition of penalty on any manufacturer, producer, a registered person of a Ware House or registered dealer, who willfully enters any wrong or incorrect particulars in the invoices issued for the excisable goods dealt by him with intent to facilitate the buyer to avail credit of the duty of excise in respect of such goods, which is not permissible under the Rules. In my view of issue of fake invoice of capital goods by M/s. MGM Tools Pvt. Ltd. would be covered by Rule 173Q(1)(bbb), and as such the appellants plea that during the period of dispute there was no provision for imposition of penalty on any manufacturer for issue a fake invoice, is not correct. Therefore, penalty on M/s. MGM Tools Pvt. Ltd. under Rule 173Q(1)(bbb) of Central Excise Rules 1944 is upheld.
9. As regards penalty on Sh. S.N.Godia, Director of appellant company under Rule 209A of Central Excise Rules from the evidence on records, it is clear that he was also involved in issue of fake invoices. It is pleaded that during the period prior to 01.03.07 there was no provisions for imposition of penalty on such persons and such a provision was introduced only w.e.f. 01.03.07 by inserting sub-rule (2) to Rule 26 of the Central Excise Rules, 2002. However, on this issue Honble Punjab & Haryana High Court in para 10 of the judgment in case of Vee Kay Enterprises Vs. CCE, reported in 2011(266) ELT-436 (P&H) has held that even in such cases penalty is imposed under section 26 of Central Excise Rules 2001/2002 (analogous to Rule 209 A of Central Excise Rules, 1944 for issue of fake invoices. In this regard para 10 of the judgment is reproduced below:-
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 in as much as the appellant claimed to have sold the goods in respect of which the Cenvat Credit was taken. In such case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods can not 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.
10. In view of the above discussion while the demand for amount under section 11D is set aside, imposition on penalty on Sh. S.N. Godia, Director of M/s. MGM Tools Pvt. Ltd. is upheld. Both the appeals stands dispose of as above.
(Order dictated in the open court) (Rakesh Kumar) Member (Technical) S.Kaur 1