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TMI Blog2014 (6) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... A No.72 of 2011 has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (in short, "the Act") against the order dated 16.11.2010, Annexure A.4 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, (in short, "the Tribunal') in Central Excise Appeal No.E/207/2009-SM(BR), claiming following substantial question of law:- "Whether setting aside penalty on the registered dealers, who have facilitated others in taking fraudulent CENVAT credit by issuing invoices without actual supply of goods, on the ground that the sub rule 2 to Rule 26 of Central Excise Rules, 2002 was inserted only w.e.f 1.3.2007 vide Notification No.8/2007- CE(NT) dated 1.3.2007 is legally correct especially when such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material and in some cases he had supplied material purchased from local market alongwith his own invoices. He further admitted having taken Cenvat Credit of Rs. 10,14,979.60 on the inputs without undertaking any manufacturing activity and further passed Cenvat Credit of Rs. 7,85,403/- by issuing sale invoices of melting scrap. Show Cause Notice dated 26.2.2007, Annexure A.1 was issued to the respondent. The case was adjudicated and the adjudicating authority confirmed the demand of duty from the manufacturer of final products and imposed varying penalties upon the manufacturers and dealers vide order dated 29.2.2008, Annexure A.2 Aggrieved by the order, all the parties filed appeals before the Commissioner (Appeals). Vide order dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No.8/2007 CE/(N.T.) dated 1.3.2007 and, thus, it could not be made applicable to the proceedings prior thereto. Judgment in Vee Kay Enterprises's cases (supra) was sought to be distinguished by urging that though this Court had held in favour of the assessee regarding non applicability of Rule 26(2) of the Rules prior to 1.3.2007, the issue therein was whether Rule 25(1) (b) and 25 (1) (d) of the Rules were applicable or not. It was argued that in the light of the findings recorded by the Commissioner(Appeals) that the present case was not covered under Rule 25(1)(b) of the Rules, the revenue cannot derive any benefit from the said pronouncement. 6. After hearing learned counsel for the parties, we do not find any merit in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enal provisions for facilitating others in taking credit or issuance of invoices without actual supply of material has been inserted w.e.f 1.3.2007 by inserting sub Rule (2) to Rule 26 of the Central Excise Rules with the issue of Notification No.8/2007-CE(NT) dated 1.3.2007. Thus during the relevant period there was no legal provisions for imposition of penalty for such offences. Therefore, penalties imposed upon the appellant Nos. 1,2,3,5,7,8,10,11 and 17 do not sustain and are set aside." 8. On further appeal by the revenue, the Tribunal confirmed the deletion of penalty with the following observations:- "7. I have carefully considered the submissions from both sides and perused the records. As per the show cause notice, M/s I.S.Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. Prior to that, there is no provision for imposing penalty for merely dealing with the invoices. This may attract penal action under other Acts. The Hon'ble High Court in the case of CCE Chandigarh vs. Ashish Gupta considered the following question of law: 'i) When it has been proved in the investigations that a person has facilitated the other parties in evading Central Excise Duty, by fraudulently facilitating MODVAT credit by supplying/endorsing gate passes without actual supply of impugned duty paid goods, whether penalty is impossable on such person under Rule 209A of Central Excise Rules, 1944 or not?' The decision of the Hon'ble High Court also took note of the fact that the revenue has filed appeals where no pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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