TaxTMI 
TaxTMI 
2014 (8) TMI 656
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....on the basis of invoices issued by the applicant. Even in the show-cause notice, allegation is that M/s Khemka Ispat Ltd. has issued invoices without supply of any raw material to the applicant and applicant further issued cenvetable invoices on the strength of which credit has been availed by M/s. S.K. Foil. During the relevant period, there were separate rules covering the Cenvat credit known as Cenvat Credit Rules 2002 and Cenvat Credit Rules 2004 and the rules for Central excise, known as Central Excise Rules, 2002. Rule 25 of Central Excise Rules provided for imposition of penalty for contravention of any of the provisions of Central Excise Rules or notification issued under these rules with intent to evade payment of duty. The applicant contended that they had not made any contravention of Central Excise Rules, if any contravention was made it was of the Cenvat Credit Rules and during the relevant period, there was no penal clause for imposing penalty in respect of allegation where the only cenvetable invoices were issued without delivery of the goods, it was only under Rule 26 of Central Excise Rules with effect from 1-3-2007, a specific rule was introduced to impose penalty....
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....y these parties were paper transactions only with the intent to fraudulently passing on the cenvat credit on the part of M/s Steel Mongers (India) Pvt. Ltd., Faridabad and availing the same on the part of M/s S.K. Foils. Also the GRs submitted by M/s S.K. Foils showed that the same were generated to cover-up the paper transactions as was evident from the fact that the manufacturer and first stage dealer stated that they had not supplied the materials and only the paper transactions were made. APPEAL NO. 1655/11 6. In this appeal, the appellant in the capacity of first stage dealer, supplied the cenvetable invoices to M/s JCBL, Lalru through M/s Swastik Steel Corporation, second stage dealer. The origin of impugned invoices was traced to M/s Khemka as above except the fact that in this appeal, the appellant acted as the first stage dealer. 7. The prolonged investigations revealed that these registered dealers have shown as if goods were purchased from one M/s. Khemka Ispat Ltd., Faridabad. The case of the department is that the said party has no facility for manufacture and has not manufactured any excisable goods and merely issued invoices to the respondents -dealers who ....
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....7, a person who issues cenvatable invoices without supplying the goods was liable to penalty. He also referred that Notification No. 8/07 C.E. (N.T.) dated 1-3-07 which prescribed penalty on a person issuing invoices without delivery of goods, being clarificatory nature, was applicable retrospectively. 10. Heard both sides. 11. I have carefully considered the submissions from both sides and perused the records. Main issue for consideration is whether where only paper invoices are issued without the accompaniment of goods, cenvat credit could be availed by the recipient and whether penalty could be imposed for such fraudulent activity of issue of fake invoices. 12. It is evident from facts that, M/s. Khemka Ispat Ltd. have not undertaken any manufacturing activity and therefore, the question of their supplying any goods on the authority of invoices did not arise. Apparently the said party was only a manufacturer on paper. Therefore, the transactions between the said manufacturer and the respondents-dealers, were only paper transactions without actual movement of goods, thus fake in nature. The original authority rightly held that the concerned manufacturers of final product....
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....aling with, any excisable goods which he knows or has reason to believe are liable to confiscation. Notification No. 8/07 C.E. (N.T.) dated 1-3-07 which prescribed penalty on a person issuing invoices without delivery of goods, reads as follows : 6. Rule 26 of the said rules, shall be re-numbered as sub-rule (1) thereof, and in sub-rule (1), as so re-numbered,- (a) with effect from the date on which the Finance Bill, 2007 receives assent of the President, for the words, 'rupees ten thousand', the words, 'two thousand rupees' shall be substituted; (b) after sub-rule(1) as so re-numbered, the following sub-rule shall be inserted, namely:- (2) Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichev....