Penalty for invoice-only transactions under Central Excise Rules was unavailable for the relevant period.

Penalty could not be imposed on a person who issued invoices without actual supply of goods, because no manufacturing activity had taken place and no excisable goods liable to confiscation had been produced. The Tribunal further held that the specific penalty provision for facilitating credit through invoices without supply, inserted as Rule 26(2) of the Central Excise Rules, 2002 with effect from 1-3-2007, was not in force for the relevant period. As the confiscation-related penalty provisions were not attracted on these facts, penalty was not imposable and the order dropping it was upheld.

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Issues: Whether penalty could be imposed on a person who had not actually dealt with goods but had issued invoices without actual supply of material, and whether such penalty was available for the relevant period under the Central Excise Rules, 2002.

Analysis: The Tribunal noted that no manufacturing activity had taken place and no excisable goods liable to confiscation had been manufactured or produced. It further noted that the specific penalty provision for facilitating availment of credit by issuing invoices without actual supply of material was introduced only with effect from 1-3-2007 by insertion of Rule 26(2) of the Central Excise Rules, 2002 through Notification No. 8/2007-C.E. (N.T.). For the relevant period, there was no corresponding provision authorising penalty on these facts, and the cited provisions relating to confiscation-related penalties were not attracted.

Conclusion: Penalty was not imposable on the respondent for the relevant period, and the order dropping the penalty was upheld.

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