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2. Heard both sides.

3. The relevant facts, in brief, are as follows:-

a) M/s. Sulabh Impex Incorporation (hereinafter referred to as importer) with an Import and Export Code Number was in import business. M/s. Sulabh Impex Incorporation a proprietary concern with proprietor Shri Sunil Kumar Mittal. Shri Alok Jain was in the business as a broker of metal scrap on commission basis. Investigation by the officers revealed that Shri Sunil Kumar Mittal issued invoices in favour of the registered dealers but no goods were not supplied by the said M/s. Sulabh Impex Incorporation. The broker Shri Alok Jain has arranged goods through other sources. The registered dealers claim to have received the goods and invoices supported by bill of entry through the broker and subsequently sold the goods to M/s. G.L. Metallica Pvt. Ltd. (hereinafter referred to as Manufacturer ) who has taken Cenvat credit to the tune of Rs.3,46,797/- based on the invoices issued by these two dealers. Shri Sunil Kumar Mittal has admitted issuing invoices only and producing fake bills of entry as if the goods were imported through Neva Sheva port and showing as if duty have been paid on such imports. He also admitted having received payment by cheque for the amounts mentioned in the said invoices and returning the money after retaining his commission. This version also stands admitted by Shri Alok Jain, the broker. On that basis, show cause notice has been issued alleging that the registered dealers were not empowered to pass on any credit and that manufacturer was not entitled to take the credit. It was also alleged that the manufacturer and the registered dealers have intentionally involved themselves in the fraud and therefore penalties were proposed. The original authority confirmed the demand of Rs.3,46,797/- under Rule 14 of Cenvat Credit Rule, 2004 read with section 11A, along with interest under section 11AB of Central Excise Act, 1944 and imposed equal amount as penalty under Rule 15(1) and Rule 15(2) of Cenvat Credit Rules, 2004. In addition, he imposed a penalty of Rs.3,46,797/- on each of the registered dealers. On appeal by the parties, the Commissioner upheld the order of the original authority.