Personal penalty for fake invoice Modvat credit fails without proof of assessee involvement or mala fide conduct.

Personal penalty for availing Modvat credit on fake invoices was held unsustainable where there was no clear finding that the assessee knew of, or participated in, the wrongful availment. The record showed that the invoice was produced before the Superintendent for defacement and the credit was promptly reversed when challenged, and there was no material establishing mala fides. In the absence of proof of involvement or culpable conduct, the foundation for penalty was not made out, and the penalty was set aside.

---

---

Issues: Whether personal penalty was sustainable where Modvat credit had been availed on invoices later found to be fake, but there was no clear finding that the appellant had any knowledge of or participation in the wrongful availment.

Analysis: The appellant had produced the invoice before the Superintendent for defacement and, when confronted by the Revenue, had promptly debited the credit amount. The authorities below did not record a clear finding that the appellant was involved in the wrongful availment of credit on the strength of fake invoices. In the absence of such finding and in the absence of material indicating mala fides, the foundation for penalty was not established.

Conclusion: Personal penalty was not justified and was set aside in favour of the appellant.

Ratio Decidendi: Personal penalty cannot be sustained for availing credit on fake invoices unless there is a clear finding and supporting material showing the assessee's involvement or mala fide conduct.

---