Penalty under Rule 26 for invoice issuance without actual goods supply was held unsustainable.

Penalty under Rule 26 of the Central Excise Rules is not attracted where invoices are issued without any actual supply or dealing in excisable goods. Treating Rule 26 as pari materia to the erstwhile Rule 209A, CESTAT Ahmedabad held that mere issuance of invoices, without involvement in the movement or supply of inputs, does not by itself create penal liability. The penalty imposed on that basis was therefore not sustainable and was set aside.

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Issues: Whether penalty under Rule 26 of the Central Excise Rules was sustainable for issuing invoices without actual supply of inputs.

Analysis: The appeal challenged only the penalty imposed under Rule 26. The Tribunal treated Rule 26 as pari materia to the erstwhile Rule 209A of the Central Excise Rules and applied the settled position that mere issuance of invoices, without dealing in excisable goods or actual supply of raw material, does not attract penal liability.

Conclusion: The penalty was not sustainable and was set aside.

Ratio Decidendi: Penalty under Rule 26 of the Central Excise Rules is not attracted where invoices are issued without actual supply or dealing in excisable goods, as the provision is pari materia to the erstwhile Rule 209A.

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