Rule 26 penalty applies to invoice issuers who facilitate wrongful credit, even before Rule 26(2) was inserted.

Penalty under Rule 26(1) of the Central Excise Rules, 2002 was held sustainable against a person who issued invoices without actual delivery of goods and thereby enabled wrongful credit. The insertion of Rule 26(2) did not exclude liability for such conduct, because the acts fell within the broader reach of Rule 26(1) as dealing with excisable goods known to be liable to confiscation. The factual finding that the invoices were used to facilitate evasion supported imposition of penalty, and the challenge failed. The penalty order was restored.

---

---

Issues: Whether penalty under Rule 26 of the Central Excise Rules, 2002 was sustainable against a person who issued invoices without delivery of goods, even before insertion of Rule 26(2).

Analysis: Rule 26(1) covers a person who is concerned in selling, transporting, removing, depositing, keeping, concealing, or otherwise dealing with excisable goods known to be liable to confiscation. The factual finding was that the invoices were issued without delivery of goods and in a manner enabling wrongful availment of credit. The subsequent insertion of Rule 26(2) did not exclude liability under Rule 26(1) for such conduct. In view of the later High Court view, the earlier contrary tribunal view could not be followed.

Conclusion: Penalty was rightly imposable under Rule 26 even prior to insertion of Rule 26(2), and the assessee's challenge failed.

Final Conclusion: The penalty order was restored and the Revenue's appeal succeeded.

Ratio Decidendi: A person issuing invoices without delivery of goods, thereby facilitating evasion or wrongful credit, is liable to penalty under Rule 26(1) of the Central Excise Rules, 2002 even before the introduction of Rule 26(2).

---