2019 (10) TMI 954

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....hout actual supply of material mentioned in the invoices. The DGCEI, on receiving information, conducted search operations on 29.09.2010 at the factory and office premises of M/s Reliance Cellulose Products Limited, M/s Y.M. Drugs, the office premises of M/s Aerochem Impex Limited, M/s Finechem (Registered Central Excise dealer and appellants herein) and recovered certain incriminating documents and records. Search operations were also conducted at the office and factory premises of M/s Pavan Drugs on 15.03.2011 and relevant records were recovered. 2. Scrutiny of records revealed that M/s Reliance Cellulose Products Limited have shown that they supplied 6,00,000 Kgs of 'Micro Crystaline Cellulose' to M/s Aerochem Impex Pvt. Ltd. during F....

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....ation to manufacture of finished products is not possible and the CENVAT Credit in such cases where the inputs were not actually received or used in the manufacture of final products was not admissible. Separate show cause notices were issued to M/s Y M Drugs & Chemicals Limited and M/s Reliance Cellulose Products Limited and M/s Pavan Drugs and Chemicals Pvt. Ltd. Proceedings were initiated against M/s Finechem as a co-noticee (appellant herein). 4. After due process of law, the original authority vide Order-in-Original dated 31.10.2012 (impugned order) confirmed the demand against the noticees. A penalty of Rs. 22.00 lakhs was imposed under Rule 26(2) of Central Excise Rules, 2002 upon the appellant. Aggrieved by such order, the appell....

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.... imposed in the present case is under Rule 26(2) and not under Rule 26(1). Sub rule (2) of Rule 26, even though uses the word "any person" as per general clauses act "person" includes legal person also. The penalties imposed therefore are legal and proper. 7. Heard both sides. For better appreciation, the relevant provisions of Rule 26(1) and Rule 26(2) of Central Excise Rules, 2002 are reproduced as under: "26. Penalty for certain offences.- [(1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under ....

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....n the case of Homag India Pvt. Ltd. as well as Apple Sponge and Power Limited (supra). In the present case, the appellant is a partnership firm and has received the invoices from M/s Pavan Drugs and M/s Y.M. Drugs without receiving any goods. The invoices were again passed on to M/s Reliance Cellulose Products Limited who availed the fraudulent credit. Thus, without receiving goods or supply of goods, the appellant has received invoices and also issued cenvatable invoices, facilitating M/s Reliance Cellulose Products Limited to avail fraudulent credit. The appellants having issued excise duty invoice without delivery of goods is, therefore, liable for penalty under Sub Rule 2 of Rule 26 of Central Excise Rules, 2002. We, therefore, do not f....