Invoice-based credit passed without receipt of goods attracts Rule 25 penalty under the Central Excise Rules.

A second stage dealer who admitted that no goods were received from the named manufacturers but nevertheless issued invoices to pass credit committed a contravention of the Central Excise Rules, 2002. The Tribunal treated the absence of receipt of goods as establishing the breach because invoices were required to correspond to actual manufacturer-supplied goods, and a dealer could not validly pass credit onward without such receipt. On that basis, penalty under Rule 25 was held sustainable and the order-in-appeal was upheld against the assessee.

---

---

Issues: Whether penalty under Rule 25 of the Central Excise Rules, 2002 was leviable where the second stage dealer admitted that no goods were received from the named manufacturers but invoices were issued onward to pass credit.

Analysis: The appellants, being second stage dealers, had admitted in their statement that they had not received the goods said to have been manufactured by the named manufacturers. Since the invoices were required to reflect the manufacturer and the goods had not been received from those manufacturers, the appellants were under a duty not to pass on credit to subsequent buyers. The lower authorities, therefore, treated the contravention as established. The penalty was also supported by the Tribunal's earlier view that equal penalty is imposable where invoices are issued without receipt of goods.

Conclusion: Penalty under Rule 25 was rightly imposed and the order-in-appeal was upheld against the assessee.

Final Conclusion: The appeal failed on merits, and the penalty order sustained by the lower authorities remained undisturbed.

Ratio Decidendi: Where a dealer issues invoices and passes credit without receiving the corresponding goods, contravention of the Central Excise Rules is established and penalty under Rule 25 is sustainable.

---