TMI Blog2014 (6) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the findings recorded by Commissioner (Appeals) to the effect that Rule 25(1) (b) of the Rules was not attracted to the facts of the present case, the aforesaid judgment does not advance the case of the revenue. However, the Commissioner (Appeals) and the Tribunal on facts deleted the penalty. Revenue has filed appeals where no penalty was imposed on persons who issued invoices without delivery of the goods prior to amendment of sub rule (2) of Rule 26 of the Central Excise Rules, 2002. After considering the above question of law, it has been held that where a person merely arranges modvatable document to the manufacturer without actual delivery of goods, penalty could not be imposed under rule 209A. Rule 26(2) of Central Excise Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/procedural lapses, the registered dealers would have been liable for penalty prior to 1.3.2007 and not for the frauds committed by them? 3. A few facts relevant for the decision of the controversy involved, as narrated in CEA No.72 of 2011 may be noticed. On 30.6.2002, the staff of Central Excise Division, Mandi Gobindgarh visited the factory premises of M/s A.R.Alloys, Nasrauli Road, Mandi Gobindgarh. No stock of duty paid scrap was found against recorded balance. A partner of the firm stated that since April 2002, they had taken Cenvat credit on invoices issued by M/s Minni Steel Traders without receiving any material with the invoices. The proprietors of Minni Steel and Minni Ispat, Mandi Gobindgarh admitted having issued invoices t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enging the demand of duty and penalties imposed but allowed the appeals of the respondent-assessees and set aside the penalties imposed. Feeling aggrieved, the revenue filed appeals before the Tribunal. Vide order dated 16.11.2010, Annexure A.4, the Tribunal dismissed the appeals on the ground that where a person merely arranges modvatable document to the manufacturer without actual delivery of goods, penalty could not be imposed under Rule 209A of the Rules. Hence the instant appeals by the revenue. 4. Learned counsel for the revenue submitted that the Tribunal had erroneously upheld the cancellation of the penalty whereas in view of the decision of this Court in Vee Kay Enterprises v. Commissioner of Central Excise, CEA Nos.7 and 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules by virtue of which an assessee was held liable for penalty where invoices were issued without any movement of goods, was inserted by notification dated 1.3.2007 which was not applicable to alleged acts committed prior to the said date. Further, in view of the findings recorded by Commissioner (Appeals) to the effect that Rule 25(1) (b) of the Rules was not attracted to the facts of the present case, the aforesaid judgment does not advance the case of the revenue. However, the Commissioner (Appeals) and the Tribunal on facts deleted the penalty. The findings of the Commissioner (Appeals) while deleting the penalty read thus: 14. I have gone through the relevant provisions of the law. The fact is that exisable goods were neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplying any goods does not arise. Apparently the said party was only a manufacturer on paper. Therefore, the transactions between the said manufacturer and the respondents-dealers, are only paper transactions without actual movement of goods. On these grounds, the original authority held that the concerned manufacturers of final products who have taken Cenvat Credit based on invoices, are not eligible for Cenvat credit and also imposed penalties on them. The order of the original authority was upheld by the Commissioner (Appeals). Of course there is no appeal by any of the said manufactures of final products before me. Therefore, it emerges that there were no goods manufactured, sold or transferred. It is not the case of diversion of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub rule (2) of Rule 26 of the Central Excise Rules, 2002. After considering the above question of law, it has been held that where a person merely arranges modvatable document to the manufacturer without actual delivery of goods, penalty could not be imposed under rule 209A. Rule 26(2) of Central Excise Rules, 2002 prior to amendment on 1.3.2007 is akin to Rule 209A. Therefore, the decision of the Hon'ble High Court will apply to the facts of the present case. 9. Learned counsel for the appellant has not been able to show any illegality or perversity in the orders passed by the Commissioner (Appeals) and the Tribunal in deleting the penalties imposed. 10. Accordingly, the substantial question of law is answered against the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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