Penalty for invoice-only transactions upheld; settlement relief cannot extend to an unadmitted noticee.

Penalty under Rule 25 of the Central Excise Rules, 2002 can be sustained where invoices are issued without delivery of goods, because such conduct amounts to a contravention linked to duty evasion. The benefit of a Settlement Commission order passed in favour of another noticee cannot be extended to a person whose own case was not admitted or settled by that Commission. Reduction of penalty depends on statutory conditions, and where the conduct involves deliberate fraud and manipulation of documents, no mitigating basis for reduction arises.

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Issues: (i) whether penalty under Rule 25 of the Central Excise Rules, 2002 was sustainable where invoices were issued without supplying goods; (ii) whether the appellants could claim the benefit of the Settlement Commission's order passed in the case of another noticee; (iii) whether the quantum of penalty was liable to be reduced.

Issue (i): whether penalty under Rule 25 of the Central Excise Rules, 2002 was sustainable where invoices were issued without supplying goods.

Analysis: The appellants accepted that invoices had been issued without delivery of goods. The Tribunal relied on the principle that a person issuing invoices and purporting to sell goods cannot deny involvement with goods merely because the goods were not physically supplied. The reasoning applied the settled view that contravention of the rule is made out even where invoices are used to facilitate evasion of duty.

Conclusion: Penalty under Rule 25 was held to be valid and payable by the appellants.

Issue (ii): whether the appellants could claim the benefit of the Settlement Commission's order passed in the case of another noticee.

Analysis: The appellants had not been admitted by the Settlement Commission, and the order passed in relation to another noticee was not treated as extending to them. The Tribunal applied the principle that the benefit of a settlement order cannot be carried over to persons who never approached the Settlement Commission.

Conclusion: The claim to be covered by the Settlement Commission's order was rejected.

Issue (iii): whether the quantum of penalty was liable to be reduced.

Analysis: The Tribunal noted that any reduced penalty under Section 11AC of the Central Excise Act, 1944 depends on statutory conditions. On the facts, the conduct was found to involve deliberate fraud and manipulation of documents, leaving no mitigating circumstance for reduction.

Conclusion: No interference with the penalty amount was warranted.

Final Conclusion: The impugned order sustaining the penalty was upheld and the appeal failed.

Ratio Decidendi: A person who issues invoices without supplying goods can still incur penalty for contravention intended to facilitate duty evasion, and the benefit of a Settlement Commission order cannot be extended to a noticee whose case was not admitted or settled by that Commission.

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