TMI Blog2016 (1) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... fences. Considering the peculiar facts of the instant case, where this entire circular paper transaction was created by the appellant and also considering the fact that there is apparently no revenue loss to the Department, the quantum of penalty imposed by L.A is on the higher side in respect of appellants, at Sl.No.1,2,4 & 5 of the Cause Title. Therefore, considering overall circumstances of the case, we reduce the penalty imposed under Rule 26 (2) (i) (ii) on the appellants. - Decided partly in favorof appellant dealers. Demand of cenvat credit - adjudicating authority dropped the demand of cenvat credit - Held that:- Though the appellants have created the documents by way of issuing documents and subsequently taking the credit without receipt of the goods, the appellants at the first instance have paid the duty by debiting the cenvat account which was again taken back by above paper transaction. Therefore, we do not find any infirmity in the order of adjudicating authority in so far as regularizing the credit and dropping of recovery of credit. Accordingly, the Revenue's appeal is rejected. - Appeal Nos.E/102-106/2010 & E/137/2010 - FINAL ORDER No.40015-40020/2016 - Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y also imposed penalties of ₹ 80 lakhs, 50 lakhs, 50 lakhs and ₹ 2 lakhs respectively on the co-noticees under Rule 26 (2) (i) (ii) of Central Excise Rules, 2002 and imposed penalty of ₹ 5000/- each on the co-noticees under Rule 15A of CCR 2004. Appellants filed these appeals only against the imposition of penalty and the Revenue reviewed the said OIO and filed appeal against the dropping of proposal of recovery of cenvat credit. 3. Heard both sides. Ld. A.R appearing on behalf of Revenue reiterated the grounds, particularly para 4.0 of GoA and submits that as per Rule 4 (1) of CCR, cenvat credit should be taken immediately on receipt of the inputs in the factory of manufacturer. In this case, the credit has been availed without receipt of any inputs and there is clear violation of Rule 4(1). He submits that adjudicating authority has no power to regularize the credit taking on documents without any supply of goods. He further submits that respondents have adopted a novel method of preparing only documents without actual movement of inputs. He showed the flow chart and the documents raised from assessee to registered dealer and the registered dealers in turn ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit through documents. 5. Regarding imposition of penalty on the main assessee, he submits that department has invoked Rule 15 (1) of CCR. He submits that the said rule would come to play only if there is removal of inputs or capital goods which is in contravention of CCR and no excisable goods are involved. The said rule cannot be invoked and no penalty can be imposed under Rule 15 (1) of CCR. Therefore he submits that there is no revenue loss nor any violation of central excise law. Therefore, imposition of penalty is not justified. If at all, any penalty is imposable, imposition of penalty under Rule 15(i) would suffice. 5.1 Regarding penalty on the co-noticees, he submits that all the four appellants are registered dealers and are governed under Rule 26 (2) (i) (ii) of the CER which is concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing of excisable goods. In this case, dealers have not availed any benefit. Therefore, higher penalty imposed under Rule 26 (2) not sustainable. As per rule 26 (2) (i) (ii), the maximum penalty imposable is ₹ 5000 which is already imposed. They are not contesting Rule 15A penalty. 6. In his rejo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order at para 6.1 to 6.5 in the form of flow chart as under :- SUJANA METAL PRODUCTS LIMITED, CHENNAI Transaction for the Quantity of 22,185.280 MTs of M.S. Squares ENDEAVOUR ₹ 3,90,53,046/- (10,675.370 MTs) SMPL = FUTURETECH = VICTORIA = SMPL Rs.8,21,75,995/- ₹ 4,23,35,541/- ₹ 8,21,75,995/- ₹ 8,21,75,995/- (22,185.390 MTs) (11,191.360 MTs) (22,185.390 MTs) (22,185,390 MTs) OMICRON Rs.10,94,722/- (318.660 MTs) As seen from the above sequence, we find that the main assessee (SMPL) have prepared the documents i.e. cenvat invoices for clearance of M.S. squares in the name of M/s.M/s.Endeavour Industries Ltd., M/s.Omnicron Bio Genesis Ltd. and M/s.Future Tech Industries Ltd. who are central excise registered deales who in turn prepared sale docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of MS Squares and subsequently the dealers have also created the similar documents showing receipt and again sale of goods. We find the appellant indulged in the entire transaction and created cenvatable documents and manipulated to show higher sales turn over in their books of accounts and to show to the financial institutions, banks etc. Apparently, we find there is no allegation on the bonafide of the original credit first debited by the appellants in this chain of events. It is the SMPL who created the chain by way of paper transaction of sale and transfer of goods and again the main appellant received back the same as receipt from the registered dealer. We find that every dealer in this transaction had immediately neutralized the credit in respect of the entire quantity shown in the documents. Therefore, we find that appellants intentionally used the central excise provisions under Rule 4 (1) of CCR, created cenvat documents and debited duty without physical movement of goods and in turn took back the credit without receipt of any goods, which is clear violation of Central Excise Act and Rules. Appellants have deliberately chosen this novel method of violating Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions introduced on 1-3-2007 to alleged acts committed prior to the said date, the matter is covered by orders of this Court referred to above which are not shown to be distinguishable. Accordingly, we hold that the amended provisions will not apply to the acts committed prior thereto. 10. In spite of?non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty. 11. As regards alternative submission of the appellant, that even if there is jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing a penalty, the gravity of offence must be looked into. The broad principle that the punishment must be proportioned to the offence is of universal application and is required to be followed save where the statute bars the exercise of discretion either in awarding punishment or releasing an offender on probation in lieu of sentencing him forthwith. 11. In the course of the arguments, the ld. Advocates appearing for the appellants have merely highlighted the facts that the appellants in process of issuing invoices and passing on the credit, got enriched only to the extent of 1 to 3% of the credit passed on and that, therefore, they cannot be held to be equal partners in the commission of offence. That gravity of offence or violation of provisions of law does not depend upon the actual benefit that the offender obtains from his illegal acts. Gravity of offence essentially depends upon the nature of violation of the provisions of law and its effect in general. There may be cases where violation of the provisions of law may not enure to any individual benefit to the offender. Can it be then said that such offender cannot be penalised at all? Being so, merely because the mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/-Rule 26 (2) (i) (ii) of CER 2002 12,50,000/- (Rupees Twelve lakhs fifty thousand only) However, imposition of penalty of ₹ 5000/- each on all the appellants under Rule 15A is upheld. 10. As far as Appeal No.E/104/2010 of M/s. Omnicron Bio-Genesis Industries Ltd., we find that the penalty imposed by the adjudicating authority is quite reasonable, therefore we uphold the same. Thus, the assessee s appeals at Sl.No.1,2,4 5 of Cause title are partly allowed in the above terms and Appeal No.E/104/2010 filed by M/s. Omnicron Bio-Genesis Industries Ltd. is dismissed. 11. As far as the Revenue s appeal, pleading for demanding cenvat credit taken by the main appellant, we find that issue is well dealt by the adjudicating authority in his findings this circular chain of bill trading transaction initiated by SMPL by using / adopting actual credit balance of ₹ 8,21,75,995/- available in their RG-23A and RG-23D account and created cenvatable invoices to three dealers mentioned above. The initial credit debited by SMPL is not under dispute and the department had admitted that appellant had sufficient balance of credit in their acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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