TMI Blog2014 (8) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... nts for the purpsose of availment of credit irrespective of the fact as to whether the subsequent sale by dealers were with or without material and whether the payment has been recorded as made against the cenvat by these dealers shown on such invoices of M/s Khemka Ispat. Under Rule 26 of Central Excise Rules, penalty can be imposed only on the person who has acquired possession or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner dealing with, any excisable goods which he knows or has reason to believe are liable to confiscation - applicants are registered under the Central Excise Rules as registered dealer and by virtue of rules they are authorized to issue cenvatable invoices to their customers in respect of the goods supplied by them. In the present case, the applicants issued invoices without supplying any goods on the strength of which credit has been availed by their customers. The applicants are duty bound to maintain time and correct stock of excisable goods and they are duty bound to issue invoices which shall contain description, classification, time and duty of removal, rate of duty, qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication 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 for such contravention. The present dispute was prior to 1-3-2007, therefore, the penalty imposed under Rule 25 of Central Excise Rules was not sustainable. 3. On the other side, revenue contended that in the present case, applicant have issued cenvetable invoices without supply of any raw materials and on the basis of these fake invoices, M/s. S.K. Foil and JCBL unit II, Lalru took undue credit. The contention was that the applicants were registered dealers under Rule 9 of Central Excise Rules, 2002. As per the provisions of Rule 10 of Central Excise Rules, the applicants were duty bound to maintain daily stock account in respect of the excisable goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stik 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 in turn merely issued invoices to the manufacturer of final products and based on such invoices, the manufacturers like M/s S.K. Foils, Bhiwani and M/s JCBL, Lalru availed Cenvat credit. The show cause notices were issued inter-alia, proposing demand of duty from the manufacturers of final products who have actually availed Cenvat credit based on such fake invoices alongwith proposal of impositions of penalties under Rule 13 and 15 of the Cenvat Credit Rules, 2002 and Rule 26 of the Central Excise Rules, 2002. The original authority confirmed demand of duty from the manufacturers of final products and imposed varying penalties on respondents-dealers. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 products who have taken Cenvat credit based on invoices, were not eligible for Cenvat credit and were liable for imposition of penalties. The invoices issued by M/s Khemka Ispat were not legal invoices for the purpose of availment of cenvat credit and hence all consequent invoices issued on the basis of invoices of M/s Khemka Ispat were also not valid documents for the purpsose of availment of credit irrespective of the fact as to whether the subsequent sale by dealers were with or without material and whether the payment has been recorded as made against the cenvat by these dealers shown on such invoices of M/s Khemka Ispat. Further, M/s S.K. Foils themselves a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (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, whichever is greater. 15. I find that in this case, applicants are registered under the Central Excise Rules as registered dealer and by virtue of rules they are authorized to issue cenvatable invoices to their customers in respect of the goods supplied by them. In the present case, the applicants issued invoices without supplying any goods on the strength of which credit has been availed by their customers. The applicants are duty bound to maintain time and correct stock of excisable goods and they are duty bound to issue invoices which shall contain description, classification, time and duty of removal, rate of duty, quantity and value of goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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