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2016 (11) TMI 473 - CESTAT BANGALORE

2016 (11) TMI 473 - CESTAT BANGALORE - TMI - Imposition of penalty u/r 25, 26 and 27 read with Section 11AC - forged invoices - issue of invoices without supply of material - Held that: - the penalty has been imposed under Rule 25 read with Section 11AC without determination of duty which is not permissible in law. As in this case no duty was determined as per the provisions of Section 11A(10) which is required to be determined if penalty under Section 11AC is to be imposed. Further, I also find .....

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s has admitted in his statement that there is mixing of various grades and also admitted the shortage of quantity but has stated that the same was not with intent to evade payment of duty. Therefore, keeping in view the facts, I am of the opinion that the imposition of penalty under Rule 25 read with Section 11AC is not imposable in the absence of determination of duty. Therefore I set aside the penalty under Rule 25. Since the Director has admitted that they have not maintained the record prope .....

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ule 26 on A.P. Venkateshwaran, Director, therefore both the appeals are disposed of accordingly. - E/3355 - 3356/2012-DB - Final Order No. 21072-21073 / 2016 - Dated:- 4-11-2016 - Shri S. S. Garg, Judicial Member Shri Ramesh Ananthan & Shri Sunder Raman, Advocates For the Appellant Shri Parashiva Murthy, AR, Mr. Mohammed Yousuf, AR For the Respondent ORDER Per S. S. Garg The present appeals are directed against the impugned order dated 11.9.2012 vide which the learned Commissioner (A) has up .....

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certain grades, there were stocks in stock book but no material. On questioning the same, the appellant s officials informed that they were not maintaining the stock on the basis of grades, since all the material were plastic granules and for all the materials removed, they were issuing the invoices and in regard to the shortage, it was mentioned that sometimes one grade got substituted to another grade. As such, it was contended that there were no shortage and in future they would try to keep .....

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om that a show-cause notice was also issued to the Director asking him to show-cause as to why penalty should not be imposed on him under Rule 26. The appellant refuted the allegation in the show-cause notice and submitted that there was no investigation conducted to prove that they had passed any duty credit fraudulently and there was no investigation as to the beneficiaries who have received the same. The Additional Commissioner vide Order-in-Original imposed the penalty of ₹ 4/- lakh un .....

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as the same has been passed without following the mandatory provisions of the Central Excise Act. He further submitted that with regard to the allegations in the show-cause notice, no investigation was conducted by the Department to prove that the appellant had passed CENVAT credit fraudulently. He further submitted that there is no iota of evidence as to who were the beneficiaries of the fraudulent CENVAT credit alleged to have been passed on by the appellant. He further submitted that the imp .....

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no order demanding duty. Accordingly, the imposition of penalty is totally unwarranted under the facts and circumstances of the case. In support of his submissions, he relied upon the decision of Jaiswal Steel Processing Vs. CCE: 2011 (9) LCX 378 wherein the Hon ble High Court relying upon the decision of Commissioner of Central Excise, Chandigarh vs. Pepsi Food Ltd. reported in 2010 (260) E.L.T. 0481 (S.C) wherein the Hon ble Supreme Court has observed as under: 21. From a perusal of the afores .....

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taken in the reply to the show cause notices was not found to be incorrect in the order-in-original. As such the imposition of penalty of the equal amount of duty under the order-in-original cannot be sustained. 22. It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires mens rea as a necessary constituent of such an offence. But when factually no fraud or suppre .....

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n in respect of the intention to evade payment of duty or on mens rea was done, penalty cannot be imposed. The question (b) is answered accordingly. 4. On the other hand, the learned AR defended the impugned order and submitted that the Director and other officials whose statements were recorded have categorically admitted the inter mixing of grades and also admitted the shortage of stock. He further submitted that the same has been done in violation of CENVAT Credit Rules for which the appellan .....

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