CESTAT reduces penalty on invoices without the actual receipt

CESTAT reduces penalty on invoices without the actual receipt

The case was filed on the basis that the vehicles mentioned were not capable of transporting bulky goods

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (Cenvat) has reduced the penalty for wrongly availing credit on invoices without the actual receipt of inputs.

An investigation was undertaken against Nisha Industries, which revealed that the appellant had wrongly availed CENVAT credit. The unaccounted-for finished goods were actually found at both the manufacturing and dealer's premises. It was also discovered that the goods were removed without paying the duty.

The appellant was one of the suppliers of goods on which Nisha Industries had availed Cenvat Credit, allegedly without the actual receipt of the goods. A show-cause notice was issued to the supplier.

In addition to proposing the demand of the wrongly availing of Cenvat Credit from Nisha Industries, the show cause notice also proposed a penalty on the appellant. The adjudicating authority vide its 2011 order, imposed a penalty of Rs.12.96 lakhs under the Central Excise Rules, 2002.

The entire case was filed on the basis that the vehicles, which were shown to have transported the goods, were not capable of carrying such bulky goods. The appellant's defense of clerical error in mentioning the vehicle numbers was known to be false.

The Coram of judicial member Ramesh Nair found there was no corroboration to the submission of the appellant. Also, the fact on record was that Nisha Industries that availed the Cenvat Credit against the demand of the amount had opted for the Sabka Vishwas (Legacy & Dispute Resolution) Scheme, 2019.

It showed that Nisha Industries had accepted the demand of fraudulent Cenvat Credit. Accordingly, the appellant was liable for a penalty for wrongly passing the credit.

However, CESTAT held that the penalty imposed was the maximum amount provided in the rules. The appellant deserved some leniency on the quantum of penalty. Accordingly, the penalty was reduced from Rs.12,94,547 to Rs.5,00,000.