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2015 (6) TMI 78 - CESTAT NEW DELHI

2015 (6) TMI 78 - CESTAT NEW DELHI - 2015 (328) E.L.T. 307 (Tri. - Del.) - Waiver of pre deposit - Imposition of penalty - Issue of bogus invoices - Evasion of duty - penalty under Rule 26 - Whether penalty can be imposed on companies or firms under Rule 26 - Difference of opinion - Majority order - Held that:- W.e.f. 01/3/07 Rule 26 of Central Excise Rules, 2002 was amended and the main Rule 26 as mentioned become sub-Rule (1) and a sub-Rule (2) was added which provided that any person who issu .....

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ater .

Penalty under Rule 26, whether under sub-Rule (1) of Rule 26 or under sub-Rule (2) of Rule 26 can be imposed on a juristic person also i.e. on a company or a firm. Moreover, if a private limited company or public limited company or a partnership or a proprietorship firm as a registered dealer issues bogus invoices without supply of any material to enable another person avail the Cenvat credit, it would not be correct to say that in such cases the person who had issued the bogus .....

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hy Technical Member,J. For the Petitioner : Shri K K Anand , Adv. For the Respondent : Shri M S Negi , DR ORDER Per Archana Wadhwa (for the Bench): All the stay petitions are being disposed of by a common order as they arise out of same impugned order passed by Commissioner vide which demand of duty of ₹ 1,45,34,221/- stands confirmed against the manufacturing unit M/s. Allianz Steel Ltd. along with imposition of penalty of identical amount. In addition penalty of ₹ 5 lakhs imposed u .....

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are again unrepresented today, inspite of notice of hearing having been sent to them well in advance, we dismiss their stay petition for non-prosecution and direct both the applicants to deposit the entire dues within a period of 10 weeks from today and report compliance on 5.12.13. As regards the other two applicants, we find that they are registered dealers and were supplying the raw materials i.e. waste and scrap to M/s. Allianz Steel Ltd. under the cover of invoice. The investigations condu .....

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. He submits that they were supplying the waste and scrap in the transportation vehicles brought by the manufacturer and in cases a number of the vehicle belonging to two wheelers etc. which are incapable of transporting the heavy raw materials. He submits that in some cases, there may be wrong mention of vehicles. In any case for the purpose of stay, learned advocate submits that M/s. K G. Ispat Ltd. is a private limited company and penalty stand imposed upon them under Rule 26 of the Central E .....

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ies [1996 (84) ELT 229 (Tri) laying down to the same effect. As regards the Jain Ispat, he submits that they have raised all the invoices and have actually sent the goods in which case no penalty can be imposed upon them. Thus, if the Revenue s allegation are accepted, at this stage he submits that inasmuch as according to the Revenue, they have not sent the goods to the manufacturer and has only raised the invoices, no penalty would still be imposable upon them as held by the Larger Bench of th .....

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e case of Woodmen Industries as confirmed by the Supreme Court would again apply. In any case the Larger Bench of the Tribunal in the case of Steel Tubes has held that where the allegations are raising of inputs without actually supply of goods, erstwhile Rule 9A ( and the present Rule 26) would not apply. Accordingly at this stage, we are of view that appellant has a good prima facie case on the basis of above decision, we grant waiver of condition of pre-deposit of ₹ 10 lakhs imposed upo .....

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he main raw materials are Iron and Steel Scrap, Sponge Iron, Ferro Silicon etc. Beside this, they have also shown the use of MS Ingots (HC) an input of manufacture MS Ingots. Shri Vikram Agnihotri is the Managing Director of M/s Allianz Steel Ltd. The period of dispute in these appeals is from 05/6/06 to 24/9/08. During this period, M/s Allianz Steel Ltd. were availing Cenvat credit of the Central Excise duty paid on inputs and capital goods as per the provisions of Cenvat Credit Rules, 2004. Sh .....

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having wrongly and fraudulently availed Cenvat credit amounting to ₹ 76,20,922/- on the basis of the invoices issued by M/s K.G. Ispat Pvt. Ltd. and M/s Jain Ispat and it is alleged that under the invoices issued by M/s K.G. Ispat Pvt. Ltd. and M/s Jain Ispat, no goods have been received and only the Cenvat credit had been passed on. It is on this basis that the Commissioner by the impugned order dated 23/2/12 while confirming the duty demand and Cenvat credit demand, as mentioned above, .....

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he Cenvat credit. Against this order of the Commissioner, these appeals have been filed by M/s Jain Ispat, M/s K.G. Ispat Ltd. and M/s Allianz Steel Ltd. alongwith stay applications. 2. Member (Judicial) in the order dictated in the open court on 12/09/13 dismissed the stay application of M/s Allianz Steel Ltd. and its Managing Director Shri Vikram Agnihotri for non-prosecution and directed both of them to deposit the entire dues within a period of 10 weeks and report compliance on 05/12/13. How .....

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s of India Ltd. vs. CCE, Indore reported in 2007 (217) E.L.T. 506 (Tri. - LB) wherein the same view has been taken. She also observed that the appeal filed by the Revenue against the Tribunal judgment s in the case Woodmen Industries vs. CCE, Patna (supra) has been dismissed by the Apex court vide judgment reported in 2004 (170) E.L.T. A307. 3. However, Member (Technical) in a separate order dated 24/9/13 recorded by him expressed the view that penalty has been rightly imposed under Rule 26 on M .....

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as referred to the undersigned for decision :- Whether in view of fact of involvement in fraudulent activity of issue of fake invoices and also supported by Punjab & Haryana High Court s judgment, pre-deposit of penalty is demandable as recorded by Member (Technical) Or Whether considering the case laws cited by advocate relying on Larger Bench decision in Steel Tubes as also Woodmen Industries, stay is to be granted to M/s K.G. Ispat and M/s Jain Ispat as held by Member (Judicial). 4. Heard .....

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ons not natural person, that this issue stands decided in the favour of the appellants by Larger Bench judgment of the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore reported in 2007 (217) E.L.T. 506 (Tri. LB) and also the Tribunal s judgment in the case of Woodmen Industries vs. CCE, Patna (supra), that the appeal filed by the Government against the Tribunal s judgment in the case of Woodmen Industries vs. CCE, Patna (supra) has been dismissed by the Apex court vide judgment .....

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ogus invoices to M/s Allianz Steel Ltd. without actual supply of any material, as the suppliers of scrap have confirmed having supplied the material mentioned in the invoices and among the transporters, only one transporter has given statement that no goods were transported and that in view of this, it is the order recorded by Member (Judicial), which is correct. 6. Ms. Sweta Bector, learned DR, supported the order recorded by Member (Technical). She pleaded that the vehicle numbers in a number .....

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dated 01/3/07 specifically provided for imposition of penalty on any person who issues an excise duty invoice without delivery of the goods specified therein or abets issue of such invoices and, therefore, in respect of the cases where such bogus invoices have been issued during period w.e.f. 01/3/07 penalty was specifically attracted on the dealer issuing bogus invoices under Rule 26 (2). With regard to such a bogus invoices issued during period prior to 01/3/07 she cited the judgment of Hon b .....

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ed dealer who has issued bogus invoices. She accordingly supported the order passed by Member (Technical). 7. Shri K.K. Anand, Advocate, in adjoiner pointed out to the statement dated 15/10/08 of Shri Vikram Agnihotri referred to in page 11 and 13 of the impugned order-in-original and pleaded that there is nothing in the statement of Shri Vikram Agnihotri from which any adverse conclusion can be drawn against M/s Jain Ispat and M/s K.G. Ispat Ltd. He also pleaded that the cross examination of th .....

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M/s K.G. Ispat Ltd. and M/s Jain Ispat has been imposed under Rule 26 of the Central Excise Rules, 2002 for issuing bogus invoices without supply of any material to M/s Allianz Steel Ltd. The allegation of issue of bogus invoices made against M/s K.G. Ispat Ltd. and M/s Jain Ispat is based on certain evidence which can be gone into in detail only at the stage of final disposal and at this stage it cannot be said that there is no evidence in this regard, as some of the transporters have denied ha .....

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rger Bench judgment of the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore (supra) and also in the case of Woodmen Industries vs. CCE, Patna (supra), the appeal against which has been dismissed by the Apex Court, has held that penalty under Rule 26 can be imposed only on the natural person and not on companies or firms. However, Member (Technical) in this regard has relied upon the judgment of Ahmedabad Bench of the Tribunal in the cases of CCE, Ahmedabad vs. Navneet Agarwal (s .....

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f Central Excise Rules, 2002 was amended and the main Rule 26 as mentioned above become sub-Rule (1) and a sub-Rule (2) was added which provided that any person who issues any excise invoice without delivery of goods specified, therein or abets making such invoices or any issues other document or abets in making such documents on the basis of which the user of the said invoice or document is likely to take or has taken any ineligible benefit under the Act or the Rules made thereunder, like claim .....

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upra) has held that the word any person in Rule 26 refers only to a natural person and penalty under this Rule can not be imposed on a company or a firm, I find that the Apex Court in the case of Madhumilan Syntex Ltd. vs. Union of India reported in 2007 (210) E.L.T. 484 (S.C.) in para 23 of the judgment with regard to the question of prosecution of a company under the provisions of the Income Tax Act has held that while it is, no doubt, true that a company is not a natural person but is a legal .....

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er Rule 26 can be imposed on natural as well as juristic person. The judgments of the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore (supra) and in the case of Woodmen Industries vs. CCE, Patna (supra) have not discussed Apex Court s judgment in the case of Madhumilan Syntex Ltd. vs. Union of India (supra). In view of this, on this point I agree with the decision of Member (Technical) that penalty under Rule 26, whether under sub-Rule (1) of Rule 26 or under sub-Rule (2) of Ru .....

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