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2018 (5) TMI 1040 - AT - Central ExciseCENVAT credit - fake invoices - invoices raised but goods not delivered - confiscation - redemption fine - penalties. Held that - the partnership firm M/s Sunrise Metal Corporation and M/s Prathmesh Steel were registered dealers; they have issued invoices to M/s Harisons Steel Ltd., on which description of the goods was steel scrap while factually the vehicle contained bazaar scrap, which may have enabled Harisons Steel Ltd, to avail ineligible CENVAT credit that an investigation was carried out in the factory premises of Harisons Steel Ltd. and various registered dealers were engaged in the similar modus operandi. Penalties on the partnership and on the individuals - Held that - M/s Sunrise Metal Corporation and M/s Prathmesh Steel being registered dealer would be covered under the provisions of Rule 25 (1) (d) of Cenvat Credit Rules, 2004, as they have contravened the provisions of Central Excise Acts and Rules made thereunder by issuing an invoice which was not accompaning by the goods as indicated on the documents - Upholding the of imposing penalty on the said firm, interest of justice can be met if penalty imposed on M/s Sunrise Metal Corporation is reduced to ₹ 70,000/- from ₹ 1,31,168/- and in the case of and M/s Prathmesh Steel to ₹ 25,000/- from ₹ 67,677/-. Personal penalty imposed on the partnership firm - Held that - the penalty imposed is almost equivalent of duty liability which is sought to be demanded and reversed in order to meet ends of justice, the personal penalty imposed on Shri Vikram Mehta, partner of M/s Sunrise Metal Corporation is reduced to ₹ 60,000/- from ₹ 1,31,168/- and in case of Jitendra to ₹ 25,000/- from ₹ 67,677/-. Confiscation - redemption fine - Held that - The finding of the first appellate authority that the consignments in the trucks were cleared as per invoices but were replaced with goods with intention to mislead Revenue by suppressing the facts, hence liable for confiscation at par with the goods meant for concealing, is the finding which are very assumptive and presumptive in nature and being so needs to be set aside - confiscation and redemption fine set aside. Appeal allowed in part.
Issues:
Appeals against orders-in-appeal involving passing of ineligible CENVAT credit, confiscation of goods, imposition of penalties, and applicability of Section 119 of the Customs Act, 1962. Passing of Ineligible CENVAT Credit: The appeals revolved around M/s Sunrise Metal Corporation and M/s Prathmesh Steel being charged with issuing invoices without accompanying the goods, leading to the passing of ineligible CENVAT credit to M/s Harisons Steel Ltd. The adjudicating authority found them guilty of assisting in availing such credit fraudulently. The counsel argued that penalties should not apply as the ineligible credit transfer did not occur, and confiscation was unjustified as the bazaar scrap seized was not concealing any goods. The tribunal upheld the penalties on the firms under Rule 25 of the Central Excise Rules, emphasizing the contravention by issuing invoices without accompanying goods, but reduced the penalties imposed. Imposition of Penalties: The tribunal found that the partnership firms had indeed issued invoices without the physical movement of goods as indicated, supporting the penalties imposed. It noted discrepancies in the goods described in the documents and those found in the vehicle, leading to the correct invocation of penal provisions. While reducing the penalties on M/s Sunrise Metal Corporation and M/s Prathmesh Steel, the tribunal upheld the penalties as justified, considering the interest of justice. Confiscation of Goods: Regarding the confiscation of goods, the tribunal disagreed with the lower authorities, ruling that Section 119 of the Customs Act, 1962 applies only when seized goods are used to conceal smuggled items. As the seized local scrap was not concealing any goods, the confiscation was deemed unsustainable. The tribunal set aside the confiscation orders for M/s Sunrise Metal Corporation and M/s Prathmesh Steel, thereby eliminating the question of redemption fine. In conclusion, the tribunal allowed the appeals, setting aside the impugned orders and emphasizing the importance of justice in determining penalties and confiscation matters related to passing ineligible CENVAT credit and the applicability of relevant legal provisions.
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