Penalty of Rs. 50,000 Overturned for Appellant Supplying Raw Material Without Duty Payment

The penalty of Rs. 50,000 imposed on the appellant under Rule 26 of Central Excise Rules for supplying raw material without duty payment was set aside by the Tribunal. The Tribunal found a lack of corroborative evidence linking the entries in third-party records to the actual supply of raw material. Relying on a previous decision regarding similar cases, the Tribunal concluded that the penalty was unjustified. Consequently, the penalty imposed on the appellant was overturned, and the appeals were allowed with any consequential relief.

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Issues: Penalty imposed under Rule 26 of Central Excise Rules on the appellant for supplying raw material to another company without payment of duty.

In the present appeal, the challenge is to a penalty of Rs. 50,000 imposed on the appellant, a registered dealer, under Rule 26 of Central Excise Rules. The penalty was imposed based on the appellant supplying raw material to another company, which used it for manufacturing their final product without paying duty. The allegations were made based on entries in the records of a third party. The Tribunal had previously set aside penalties in identical matters based on the same facts and circumstances. The Tribunal observed that there was no corroborative evidence to support the allegations, and there was a lack of evidence linking the entries to the actual supply of raw material to the appellant. Therefore, the penalty was set aside in line with the previous decision regarding similar cases. Consequently, the penalty imposed on the appellant was also set aside, and the appeals were allowed with any consequential relief.

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