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Jain Ispat, Allianz Steel Ltd, Shri Vikram Agnihotri, KG Ispat Ltd Versus Commissioner of Central Excise, Indore

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 issues any excise invoice without delivery of goods specified, therein or abets .....

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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 invoices would not be liable for penalty under Rule 26 (2). - this is not .....

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espondent : 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 upon Shri Vikram Agnihotri, Managing Director of the Company under Rule 26 o .....

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nt 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 conducted by the Revenue reveal that such waste and scrap cleared by the appella .....

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tion 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 Excise rules. He draws our attention to the Tribunal s decision in the case .....

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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 the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore [2007 ( .....

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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 upon said two applicants. 5. All four stays are disposed of in the above manne .....

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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. Shri Vikram Agnihotri is the Managing Director of M/s Allianz Steel Ltd. M/s .....

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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, against M/s Allianz Steel Ltd., Dewas alongwith interest thereon under Sect .....

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e 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. However, with regard the other two appellants M/s K.G. Ispat Ltd. and M/s Jain .....

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B) 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/s Jain Ispat and M/s K.G. Ispat Ltd. for issue of bogus invoices and that .....

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nvolvement 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 both the sides in respect of point of difference. 5. Shri K.K. Anand, Advo .....

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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 reported in 2004 (170) E.L.T. A307, that no reason had been given by Member .....

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al, 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 of invoices issued by M/s Jain Ispat and M/s K.G. Ispat Ltd. were found to .....

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n 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 ble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. C .....

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r 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 the transporters whose statements had been relied upon had been requested, bu .....

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e 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 having transported the goods covered under the invoices and in some cases the .....

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. 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 (supra). 10. During the period prior to 01/3/07 Rule 26 provided that: any pe .....

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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 claiming of Cenvat credit under Cenvat Credit Rules, 2004 or refund, shall be li .....

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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 or juristic person, the Corporate criminal liability is not unknown to law .....

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nts 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 Rule 26 can be imposed on a juristic person also i.e. on a company or a firm. .....

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