2015 (10) TMI 915 - AT - Central Excise

Tribunal overturns penalties for invoicing without delivery due to retrospective application issue

The tribunal set aside penalties imposed on the appellants under Rule 26 of the Central Excise Rules, 2002 for issuing invoices without delivering goods ... Imposition of penalty u/r 26 - Issue of bogus invoices - Held that:- On plain reading of the provisions it is clear that any person who is dealing with the excisable goods in any manner is liable to be penalized under Rule 26 of the Central Excise Rules, 2002. As per the allegation alleged against the appellants it is clear that appellants were not dealing with excisable goods and only issuing the invoices. - To impose penalty the person who is issuing the invoices without delivering the goods the provisions under Rule 26 ibid has been introduced w.e.f. 1-3-2007. Admittedly, during the period when the appellants have issued invoices the said provisions was not there. Therefore, penalty under Rule 26 of the Central Excise Rules, 2002 is not imposable on the appellants under the old provisions relating to the impugned period. - Impugned order is set aside - Decided in favour of assessee. Issues:- Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 for issuing invoices without delivering goods.- Applicability of penalty provisions during the period of invoicing.- Interpretation of Rule 26 for penalizing individuals dealing with excisable goods.Analysis:1. Imposition of Penalty under Rule 26: The appellants were appealing against an order imposing penalties under Rule 26 of the Central Excise Rules, 2002 for allegedly issuing invoices without supplying goods to the manufacturer buyer. The Revenue alleged that the appellants did not deliver the goods as claimed by the manufacturer buyer, leading to the penalty imposition by the lower authorities.2. Applicability of Penalty Provisions: The appellant's representative argued that the show cause notice for penalty, issued in December 2005, was beyond the permissible period as the relevant provisions of Rule 26(2) were not in force during the invoicing period of December 2004 to January 2005. Citing a tribunal decision, it was contended that penalties cannot be imposed retroactively when the provisions were not in place during the alleged offense period.3. Interpretation of Rule 26: The Revenue, however, argued that penalties could be imposed within five years of knowledge, and since the notice was issued within this timeframe, the extended period of limitation was applicable. They contended that the appellants were involved in selling the goods in question, justifying the penalty under Rule 26. The Revenue further supported their position by stating that the goods were not delivered due to the vehicle being stolen, as confirmed by the buyer's statement.4. Judgment: The tribunal analyzed Rule 26 of the Central Excise Rules, 2002, which penalizes individuals dealing with excisable goods. It was observed that during the invoicing period, the provisions for penalizing individuals issuing invoices without delivering goods were not in effect until March 2007. Therefore, the tribunal concluded that penalties under Rule 26 could not be imposed on the appellants for the period in question. Consequently, the tribunal set aside the penalties and allowed the appeals with any consequential relief.This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the tribunal's decision based on the interpretation of relevant legal provisions.