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2016 (11) TMI 403 - AT - Central ExciseImposition of penalties u/r 26 and 27 of the Central Excise Rules, 2002 - utilisation of CENVAT credit Cenvat credit on the basis of fake and bogus input invoices - Rule 9 read with Rule 12B of the Central Excise Rules, 2002 - whether the appellants being merchant exporters are liable for penalty under Rule 26 in connection with the offence committed by M/s. Singh Inc., manufacturer - Held that: - the supply of goods under the cover of invoice and ARE1 made to the appellant by manipulating the same was not known to the appellants therefore without the knowledge of the appellants if any fraud has been committed the appellants cannot be held responsible and consequently penalty cannot be imposed. Validity of CHA statement - the goods received in the port were transported from different place - Held that: - In this regard it could not establish that the goods were not supplied by M/s. Singh Inc. as the invoicing by M/s. Singh Inc. and payment there for by the appellant have not been disputed by the investigation, therefore the evidences is not conclusive to allege the involvement of the appellants in fraudulent activity of M/s. Singh Inc. Merely because supplier of the goods have committed fraud the buyer of the goods cannot be penalised. It is necessary to establish beyond doubt that the buyer is knowingly involved in the fraud committed by the supplier which in the present case has not been established. Therefore the appellants are not liable for penalty under Rule 26 - Since penalties u/r 26 waived, there is no need to go into the legal issues whether penalty under unamended Rule 26 is imposable for the offence committed prior to 1/4/2007 and also on the issue whether composite penalty can be imposed under Rule 26 and 27 - appeal allowed - decided in favor of appellant.
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