Penalty for alleged fake invoices fails where the department cannot prove issuance by the assessee.

Penalty under Section 173Q of the Central Excise Rules was held unsustainable where the allegation of issuance of fake invoices was not supported by evidence. The record showed that the appellant's premises were searched without any adverse recovery, the appellant consistently denied issuing the invoices, and no material established that the invoices were in fact issued by the appellant. The absence of the alleged beneficiary from the proceedings did not remedy the evidentiary gap, and the penalty was set aside in favour of the assessee.

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Issues: Whether penalty imposed under Section 173Q of the Central Excise Rules was sustainable when the allegation of issuance of fake invoices was unsupported by evidence.

Analysis: The penalty was based on the allegation that the appellant had issued fake invoices on the strength of which another entity had availed credit. The record showed that the appellant's premises were searched and nothing adverse was found, and the appellant had consistently denied issuance of the invoices. There was no evidence to establish that the appellant had issued the invoices in question. The absence of the alleged beneficiary from the present proceedings did not cure the evidentiary deficiency against the appellant.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

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