M/S. Mardia Alloys vs C.C.E. Delhi-I

[Arising out of Order-In-Appeal No. 196-CE-DLH-2013 dated: 28.11.2013 passed by CCE (A) Delhi-I]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Mardia Alloys ...Appellant

Vs.

C.C.E. Delhi-I Respondent

Appearance:

Sh. Bharat Bhushan (Advocate) for the Appellants

Mr. R K Mishra, DR for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing.01.09.2015

FINAL ORDER NO. 54087 /2015

Per S. K. Mohanty (for the Bench):

This appeal is directed against the impugned order dated 28.11.2013 passed by the Commissioner (Appeals) wherein penalty of Rs. 2,404,902/- imposed on the appellant under Rule 25 of the Central Excise Rules, 2002 in the Adjudication Order dated 7.8.2012 has been upheld. The brief facts of the case are that the appellant is a second stage dealer duly registered with the Central Excise Department for purchase and sale of brass pipes. During the disputed period, the appellant claimed that they had purchased brass pipes from M/s Rachna Metal Industries (first stage dealer) who in turn purchase the same from the manufacturer M/s V K Metal Works. The appellant sold such brass pipes to its customers under cover of 10 numbers of Central Excise invoices. There was a preventive search in the factory of the M/s V K Metal Works wherein it was observed by the Central Excise Authorities that the said manufacturer does not have any capacity to manufacture of brass pipes. On the basis of the investigation at the manufactures end, the Preventive Officers visited premises of M/s Rachna Metal Industries, the first stage dealer and during the course of investigation they found out that instead of brass pipes, the said first stage dealer had supplied the copper ingots to the present appellant. There is no evidence on record to show that the appellant had purchased brass pipes instead of copper ingots as claimed by the first stage dealer. The investigation conducted by the Central Excise Officials culminated in the adjudication order wherein the penalty was imposed on the appellant as well as on the first stage dealer M/s Rachna Metal Industries in terms of the Rule 25 of the Central Excsie Rules, 2004.

2. Sh. Bharat Bhushan the Ld. Advocate appearing for the appellant submits that the Department has not specifically alleged that the goods covered under the disputed invoices were not brass pipes, which were received by the appellant. He further submits that since the appellant had received brass pipes under the cover of proper valid documents from the first stage dealer M/s Rachna Metal Industries and supplied the same to the ultimate consignee, imposition of penalty invoking the provisions of Rule 25 is not proper.

3. Per Contra, Sh. R K Mishra the Ld. DR appearing for the Respondent reiterated the findings recorded in the impugned order and submits that since the goods, in question, have not arising out of any manufacturing process in the factory of V K Metal Works, the supply of the same to the first stage dealer and subsequently to the second stage dealer, fascinating to the ultimate consumer to take cenvat credit clearly would show the intention of the parties in defrauding the Government Revenue. The entire transactions in the cycle have been made in the paper without really involvement of any goods. The Authorities are justified in impsing penalty under Rule 25 of the Central Excise Rules, 2002. To substantiate his stand that imposition of penalty in the facts and in the circumstances of the present case is justified, the Ld. DR relies on the judgment of Honble Supreme Court in the case of Indian Special Castings (P) Ltd. vs CCE reported in 2010 (225) ELT 844 (SC) and the Judgment of Honble Punjab & Haryana High Court in the case of Ayushi Steel Company (P) Ltd. vs Commissioner reported in 2012 (285) ELT A18 (P & H).

4. I have heard the Ld. Counsel for both sides and perused the records.

5. It is seen from the available records that there was no movement of goods in the chain of supply from the manufacture to the ultimate buyer, who availed the fraudulent cenvat credit of Central Excise duty indicated in the invoices. The appellant has also not specifically provided any evidence to counter the allegation of the Central Excise Department that the disputed goods have been received by it and supplied to the buyers, entitling them to take cenvat credit. Therefore I am convinced that imposition of penalty in the adjudication order under Rule 25 of the Central Excise Rules, 2002 and subsequently upheld by the Commissioner (Appeals) in the impugned order is justified. I also find support from the judgment cited by the Ld. DR wherein it has been specifically held that dealers passing cenvat credit without supplying of goods is liable to pay penalty prescribed under the Statute.

6. Therefore, I do not find any merits in this case. The appeal filed by the appellant is dismissed.

(Dictated and pronounced in open court)

(S.K. Mohanty)

Member(Judicial)

Neha

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