2014 (2) TMI 637 - AT - Central Excise

Managing Director's Penalty Confirmed for Issuing False Invoices

The Tribunal confirmed a penalty on the Managing Director for issuing cenvatable invoices without supplying goods, reducing the penalty amount on appeal. ... Availment of CENVAT Credit - Waiver of pre deposit - Held that:- Shri Mukesh Sangla has clearly admitted the issue of cenvatable invoices without supply of goods, and these statements have not been retracted. The statement of Shri Kirti Kala, Cashier recorded on 8.3.2009 as also of Shri Paras Patidar, Marketing Manager of M/s Signet Overseas Ltd. dated 22.2.2009, also confirmed the issue of cenvatable invoices without supply of goods. From these statements also it comes out that this has been done on instruction of Shri Mukesh Sangla, the MD. The investigation has also brought on record that LRs issued for transportation of goods were in names of the companies which were found non-existent. Based on the evidences available on record, the charge against the appellant Shri Mukesh Sangla stands clearly established. Therefore, the appellant has not made out a case for complete waiver of pre-deposit of the penalty imposed on him. The fact that the main appellant has made pre-deposit and the same should be considered as sufficient for hearing the appeal of the present appellant, has no legal basis. Since prima facie Shri Mukesh Sangla is found instrumental in issuing the bogus invoices, we direct him to pre-deposit an amount of Rs.1 lakh within a period of six weeks towards the penalty imposed on him and report compliance on 1.1.2014. On such compliance, pre-deposit of balance of amount of penalty shall stand waived and recovery thereof stayed during the pendency of the appeal - Conditional stay granted. Issues:- Allegations of issuing cenvatable invoices without supplying goods- Imposition of penalty on the Managing Director- Request for stay applicationAnalysis:Allegations of issuing cenvatable invoices without supplying goods:The case involved allegations against the Managing Director of a company for issuing 7 invoices passing a CENVAT Credit amount to another company without actually supplying the goods. The charge was that these transactions were bogus, aimed at passing on ineligible CENVAT Credit. The adjudicating authority confirmed a penalty, which was later reduced on appeal. The appellant argued lack of corroborative evidence and that the transactions were in the name of the company, not the Managing Director. However, statements from various individuals, including the Managing Director himself, confirmed the issuance of bogus invoices without goods supply. The Tribunal found the charge established based on the evidence, rejecting the plea for complete waiver of the penalty.Imposition of penalty on the Managing Director:The appellant contended that since the invoices were in the company's name, the penalty should be on the firm, not the Managing Director. However, the Tribunal noted that the Managing Director's involvement in issuing the bogus invoices was clearly established through statements and evidence. The Tribunal directed the Managing Director to pre-deposit a specific amount towards the penalty, with the balance to be waived upon compliance.Request for stay application:The appellant requested a stay on the penalty pending appeal, citing a previous order involving a related party. The Tribunal rejected this request, stating that the pre-deposit by the main appellant in a separate case did not automatically apply to the present appellant. The Tribunal directed the Managing Director to pre-deposit a specific amount within a set timeframe, with the balance of the penalty to be waived upon compliance and recovery stayed during the appeal process.This judgment highlights the importance of substantiating charges with evidence, the liability of individuals in fraudulent transactions, and the specific requirements for pre-deposit and stay applications in penalty cases before the Tribunal.