CCE Vs. SURYA ISPAT UDYOG

JUDGEMENT

(1.) REVENUE filed this appeal against the order of the Commissioner (Appeals) whereby the Commissioner (Appeals) set aside the penalty of Rs. 50,000/ - imposed on the respondent.

(2.) THE relevant facts of the case, in brief, are that M/s. Monga Brothers Limited, Ludhiana (in short "the manufacturer) were engaged in the manufacture of Iron & Steel Ingots and availing Cenvat Credit on the inputs. Show cause notice dated 22.7.2003 was issued by the jurisdictional Deputy Commissioner of Central Excise of the manufacturer, alleging that the manufacturer availed irregular Cenvat credit amounting to Rs. 1,03,160/ - on the basis of the fake invoices issued by the respondent, sold through registered dealer M/s. V.K. Aggarwal & Sons. The adjudicating authority disallowed the credit of Rs. 1,03,360/ - which was deposited by the manufacturer at the time of detection and a penalty of 25% of the duty was imposed on them. He also imposed penalty of Rs. 50,000/ - each on the respondent and M/s. V.K. Aggarwal & Sons under Rule 26 of the Central Excise Rules, 1944 The Commissioner (Appeals) set aside the penalty imposed on the respondent as well as the registered dealer on the ground that the Deputy Commissioner of Central Excise, Ludhiana has no jurisdiction to impose penalty on the respondent whose factory and the registered dealer's office are situated at Mandi Govindgarh. The next finding of the Commissioner (Appeals) is that penalty under Rule 26 of the Central Excise Rules, 2002, is imposable only on a person and not on the firm.

(3.) THE learned advocate on behalf of the respondent submits that the case proceeding was initiated on the allegation that the respondents issued fake invoices whose factory is situated at Mandi Govindgarh and, therefore, penalty can be imposed by the jurisdictional Deputy Commissioner of Mandi Govindgarh. He submits that the Commissioner (Appeals) rightly held that penalty cannot be imposed on the firm under Rule 26 of Central Excise Rules, 2002 as held by this Tribunal. He further submits that Rule 26 cannot be invoked on any person who issued invoices for availment of Cenvat Credit. It is his contention that imposition of penalty in such a situation has been incorporated under Sub -rule (2) of Rule 26 of the Central Excise Rules, 2002 by inserting dated 1.3.2007. He further submits that this Tribunal in the case of CCE, Chandigarh v. Ashish Gupta reported in 2007 (214) ELT 339 (Tri. -Del.) held that penalty under Rule 209A of erstwhile Central Excise Rules, 1944 (Rule 26 of the Central Excise Rules, 2002) cannot be imposed on the ground that the person had facilitated evasion of duty by issuing the fake invoices in question.