Custom, Excise & Service Tax Tribunal
M/S M.S. Metals vs Cce, Panchkula on 20 February, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Excise Appeal No. 397 of 2011 (SM) [Arising out of the Order-in-Appeal No. 694/CE/D-II/2010 dated 16/11/2010 passed by The Commissioner of Central Excise (Appeals), New Delhi.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) 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 would 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 : Department Authorities? M/s M.S. Metals Appellant Versus CCE, Panchkula Respondent
Appearance Shri Abhishek Jaju, Advocate for the appellant.
Ms. Shweta Bector, Authorized Representative (DR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 20/02/2013.
Final Order No. 55660/2013 Dated : 20/02/2013 Per. Rakesh Kumar :-
The appellant are a registered dealer dealing in zinc ingots. On the basis of an invoice issued by them to M/s Sonia Overseas Pvt. Ltd., M/s Sonia Overseas took Cenvat credit of Rs. 1,04,083/-. Subsequent investigation revealed that the appellant as a registered dealer had issued only a bogus invoices to M/s Sonia Overseas without sale of any goods. In view of this, after issue of show cause notice, the Jurisdictional Assistant Commissioner vide order-in-original dated 31/3/10 while confirming the Cenvat credit demand against M/s Sonia Overseas, also imposed penalty of Rs. 1,04,083/- on the appellant under Rule 26 of the Cenvat Credit Rules. On appeal to Commissioner (Appeals), this order of the Assistant Commissioner with regard to the appellant was upheld vide order-in-appeal dated 16/11/10 against which this appeal has been filed.
2. Heard both the sides.
3. Shri Abhishek Jaju, Advocate, the learned Counsel for the appellant, pleaded that the show cause notice issued to the appellant sought imposition of penalty on the appellant under Rule 26 (2) for issue of bogus invoice without supplying any material, that the alleged transaction had taken place in March 2004 while Rule 26 had been amended by inserting sub-Rule (2) w.e.f. 1/3/07, that the Assistant Commissioner as well as Commissioner (Appeals) have upheld the penalty on the appellant under Rule 26 (2) only, while this Rule was not existence in March 2004 and, therefore, no penalty could be imposed on the appellant for issue of bogus invoice without supplying any material, as the sub-Rule (2) which specifically provides for penalty for such offences was introduced only w.e.f. 1/3/07, that in this regard he relies upon the judgment of Honble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. CCE 2011 (266) E.L.T. 436 (P&H) and also the Apex Courts judgment in the case of CCE vs. Elgi Equipments Ltd. reported in 2001 (128) E.L.T. 52 (S.C.). He, therefore, pleaded that the impugned order upheld the penalty on the appellant is not sustainable.
4. Ms. Shweta Bector, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the fact of issue of bogus invoices without supply of any material is not disputed, that Honble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. CCE (supra), the judgments cited by the learned Counsel for the appellant, in para 10 of the judgment had clearly held that in spite of non-applicability of Rule 26 (2), penalty could be imposed under Rule 26, as it existed prior to 1/3/07 as well as under Rule 25 (1) (d) of Central Excise Rules, 2002, as the appellant was concerned in selling or dealing with the goods which were liable to confiscation in as much as the appellant claims to have sold the goods in respect of which the Cenvat credit was taken, and in such a case, Rule 25 (1) (d) and 26 (1) of the Central Excise Rules are also applicable and that in view of this, there is no infirmity in the impugned order upholding the imposition of penalty.
5. I have considered the submissions from both the sides and perused the records.
6. 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 penalty for such offences was introduced by inserting sub-Rule (2) to Rule 26 of the Central Excise Rules, 2002 w.e.f. 1/3/07, Honble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. 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 fraudently avail the Cenvat credit and sought imposition of penalty for this offence, which in view of the judgment of Honble Punjab & 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.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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