Rule 26 would cover “company” for the purpose of imposition of penalty for passing Fake CENVAT: CESTAT

Rule 26 would cover “company” for the purpose of imposition of penalty for passing Fake CENVAT: CESTAT

On information received that M/s GK Founders Pvt. Ltd. is indulging in evasions of a huge amount of Central Excise Duty by fraudulent availment of Cenvat Credit. on the strength of Central Excise Invoices issued by M/s Shreeji Aluminum Pvt. Ltd. without physical receipts of the goods. After a thorough investigation, the adjudicating authority demanded Cenvat Credit along with interest and imposed a penalty under Rule 26 of Central Excise Rules 2002 on all the Appellants. Aggrieved by the said order, appellants filed present appeals before the Tribunal.

The tribunal found that Rule 26 of the Central Excise Rules is applicable to any person who acquires possession of or in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner dealing with any excisable goods which he knows or has reason to believe are liable to confiscation. In the present matter, the Appellants were actively involved in facilitating to pass on the wrong cenvat credit under Cenvat credit rules by issuing Cenvat Invoices without actual delivery of goods.

Under the facts and circumstances, the penalty imposed on them is correct as they were concerned with such cenvatable invoices wherein they showed the clearance of goods without delivery and were in the knowledge that such goods are liable to confiscation.

Further, the contention of the appellant that penalty under Rule 26 cannot be invoked on the company also doesn’t stand as in Madhumilan Syntex Ltd. v. Union of India it was held that the company is not a natural person but ‘legal’ or ‘juristic’ person, cannot be ordered to suffer imprisonment, other consequences but would ensure eg, payment of fine, etc. Thus, the “person” as mentioned in Rule 26 would cover the “company” for the purpose of imposition of penalty and the penalty imposed on the appellants is correct.

Under the facts and circumstances, the tribunal found no reason to set aside the orders for the imposition of penalty. The appeals were thus not allowed.


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