At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONOURABLE MR. S.K. GAULE
By, MEMBER (TECHNICAL)
None for the appellant. Shri S.M.Vaidya, Authorized Representative (JDR) for the respondent.
The appellant filed this appeal against Order-in-Appeal No: PII/PAP/207/2008 dated 21/10/2008 whereby the Commissioner (Appeals) has upheld the imposition of penalty of Rs. 2,93,182/- imposed under Rule 25 of the Central Excise Rules, 2002 by the adjudicating authority.
2. Briefly stated facts of the case are that proceedings were initiated against the appellant who has issued CENVATable invoices as a second stage dealer, without physically supplying the goods, in the month of October, 2004 so as to enable the beneficiary to avail inadmissible CENVAT credit. The appellant obtained 10 invoices from a Delhi based dealer without receiving the goods physically. Thereafter, the proceedings were initiated against the appellant as well as against the manufacturer who has availed the credit on the basis of the said invoices. The lower authority confirmed the proposal in the show-cause notice and confirmed the demand of Rs. 2,93,184/- along with interest against M/s. Varron Industries, the manufacturer who has availed CENVAT credit and imposed equal amount of penalty under Section 11AC upon it. The lower authority also imposed penalty equal to duty amount on the appellant i.e. Rs. 2,93,184/- under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Aggrieved by the order of the adjudicating authority, the appellant filed appeal before the Commissioner (Appeals), who upheld the imposition of penalty upon the appellant. Hence the present appeal by the appellant.
3. The contention of the appellant is that Rule 25 of the Central Excise Rules, 2000 is not applicable to a dealer. Section 11AC was not invoked in the show-cause notice.
4. The learned DR contented that Rule 25 begins with sub-rule (1) beginning with "subject to the provisions of Section 11AC of the Act. ......", therefore, Rule 25 should be automatically read with Section 11AC. The learned DR also contented that the penalty imposed under Rule 25 is correct and in support and in support he cited the Tribunal's decisions in the cases of Kurele Industries vs. Commissioner of Central Excise 2008 (229) ELT 275 (Tri.-Del) and Baldev Raj Ram Murti vs. Commissioner of Central Excise, Ludhiana/Chandigarh 2007 (220) ELT 786.
5. Undisputedly, Section 11AC was not invoked in this case and lower adjudicating authority travelled beyond the show-cause notice and the Commissioner (Appeals) also did so by upholding the impugned order. I do not subscribe to the view of the learned DR that once Rule 25 ibid is subject to provisions of Section 11AC it automatically becomes applicable in the case wherever Rule 25 ibid is invoked. On a query from the Bench as to which sub-rule has been contravened, there was no satisfactory answer to the query. So far as the decisions of the Tribunal cited by the learned DR, in the case of Kurele Industries (supra) there was a charge of contravention of Rule 52A against the dealer in that case. In the case of Baldev Ram Murti (supra) there was a contravention of Rule 57G and the penalty was imposed under Rule 173Q of erstwhile Central Exci
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se Rules, 1944 and the Rules 9 and 15 of the CENVAT Credit Rules, 2004 were also invoked. These cases are not applicable to the instant case. Therefore, the imposition of penalty under Rule 25 imposed on the appellant in the case is not sustainable in law. 6. In view of the above, I allow the appeal and set aside the impugned order.