2023 (5) TMI 376 - AT - Central Excise

Tribunal reduces penalty for false invoices from Rs. 25 lakhs to Rs. 2.5 lakhs under Central Excise Rules

Mr. Mukesh Kapoorchand Mehta Versus Commissioner of Customs & Central Excise, Pune-I

The Tribunal partially allowed the appeal challenging the penalty of Rs. 25 lakhs imposed on the appellant under Rule 26(2) of Central Excise Rules, 2002 ... Levy of penalty on Proprietor of the Firm under Rule 26(2) of Central Excise Rules, 2002 - fraudulent availment of CENVAT Credit on the basis of Central excise invoices issued by the registered dealer namely M/s. Ganesh Metals, Propriety concern of the appellant, without actually receiving the goods - HELD THAT:- The appellant has in fact contravene the provisions of the Central Excise Rules, 2002, by providing the invoices without actually supplying the goods to the said two units. Hence, liable for final action under Rule 26(2) of Central Excise Rules, 2002. The total CENVAT credit that has been availed by the 2 units in contravention against the invoices of the appellant is amounting to [Rs.46,83,774/-(BED-Rs.39,76,774/- plus ED Cess – Rs. 78,622/- plus SHE – Rs. 39,689/- plus AED-Rs. 5,88,689/-] + [Rs. 6,76,868/- (BED-Rs. 4,78,010/- plus ED.Cess-Rs- Rs. 9,570/- plus SHE-Rs. 4,787/- plus AED-Rs. 1,84,501/-]=53,60,642/-. Taking note of the fact that penalty imposed on the appellant is above 50% of the credit taken by the set 2 units - the penalty imposed is excessively high. Hence for justice will be met if the set penalty is reduced to 10% of the penalty imposed on the appellant - Impugned order in respect of the appellant is thus modified holding the penalty of Rs. 2.5 Lakhs against the appellant. Appeal allowed in part. Issues:- Imposition of penalty under Rule 26(2) of Central Excise Rules, 2002 on the appellant for providing invoices without actual supply of goods.- Dismissal of appeal by M/s. Lipid Systems Engineer P. Ltd. and M/s. Bran Engineer Pvt. Ltd. for non-prosecution.- Discrepancies in statements and findings regarding the appellant's involvement in the case.- Commissioner's findings on the appellant's responsibility and contravention of Central Excise Rules, 2002.- Assessment of penalty amount and modification of the penalty imposed.Analysis:1. Imposition of Penalty: The appeal challenged the penalty of Rs. 25 lakhs imposed on the appellant under Rule 26(2) of Central Excise Rules, 2002 for providing invoices without actual supply of goods to M/s. Lipid Systems Engineer P. Ltd. and M/s. Bran Engineer Pvt. Ltd. The investigation revealed discrepancies where goods mentioned in invoices were not physically received by the companies, leading to the contravention of rules.2. Dismissal of Appeal: The appeal filed by M/s. Lipid Systems Engineer P. Ltd. and M/s. Bran Engineer Pvt. Ltd. was dismissed for non-prosecution in accordance with Rule 20 of the CESTAT Procedure Rules, 1982. This dismissal further strengthened the case against the appellant regarding the irregularities in providing invoices without actual goods supply.3. Discrepancies in Statements: The appellant's counsel highlighted discrepancies in the statements recorded, arguing that certain findings were based on incorrect information. The Commissioner's findings were challenged based on the absence of specific statements on record, aiming to disprove the allegations against the appellant.4. Commissioner's Findings: The Commissioner held the appellant responsible for issuing invoices without actual supply of goods, emphasizing the failure to produce documentary evidence of goods being physically received. Statements from transport managers confirmed non-transportation of goods mentioned in the invoices, leading to the conclusion that the appellant facilitated irregular CENVAT credit utilization, justifying the penalty under Rule 26(2).5. Assessment of Penalty: The Tribunal considered the excessive nature of the penalty imposed, amounting to Rs. 25 lakhs, which exceeded 50% of the credit taken by the two units. In the interest of justice, the penalty was reduced to Rs. 2.5 lakhs, representing 10% of the original penalty amount. The modification of the penalty marked the partial allowance of the appeal, providing relief to the appellant.This detailed analysis of the judgment showcases the legal intricacies involved in the case, including the investigation findings, discrepancies in statements, and the ultimate decision regarding the penalty imposed on the appellant.