Central Excise Appeal No. 160 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Central Excise Appeal No. 160 of 2010 Date of decision: 17.3.2011 M/s. Asim Enterprises through its Proprietor Vinod Kumar Gupta --- Appellant Versus Commissioner of Central Excise Chandigarh. --- Respondent **** CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Jagmohan Bansal, Advocate for the appellant. --- AJAY KUMAR MITTAL, J. This appeal filed under Section 35G of the Central Excise Act, 1944 (for short “the Act”) has been filed by the assessee, praying for quashing the final order No. 799-828/2009- Ex. dated 16.9.2009 whereby the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short “the Tribunal”) upheld the penalty levied under Rule 209A of the Central Excise Rules, 1944 Central Excise Appeal No. 160 of 2010 2 ( in short “the 1944 Rules”) read with Rule 26 of the Central Excise Rules, 2001 (in short “the 2001 Rules”). 2. The following substantial questions of law have been claimed by the appellant for determination of this Court: “ (a) Whether penalty under Rule 209A of the Central Excise Rules 1944 and Rule 26 of the Central Excise Rules, 2001 can be imposed upon the appellant? (b) Whether penalty prior to March, 2007 can be imposed upon a dealer when specific provision was inserted in Rule 26, w.e.f. 1.3.2007?” 3. The facts, in brief, necessary for adjudication as narrated in the appeal, are that on the basis of feedback supplied by the intelligence to the effect that a firm, M/s. Asian Alloys Ltd., one of the buyers of the appellant, was engaged in evasion of central excise duty as it was availing Modvat/Cenvat Credit duties paid on inputs without receiving such inputs, the officers of the Directorate General of Central Excise (Intelligence), New Delhi (for brevity “DGCEI”) searched the premises of M/s. Asian Alloys Limited and the appellant, on 12.1.2001. Certain documents were seized during the search. 4. After completion of investigation, the DGCEI issued a show cause notice dated 13.8.2002 calling upon the appellant to show cause as to why penalty under Rule 173Q of the 1944 Rules and Rule 25 of the 2001 Rules be not imposed as the appellant had issued Modvatable/ Cenvatable invoices to M/s. Asian Alloys Limited without supplying the goods and had facilitated them to take credit of Rs. 82,22,362/- without receiving the inputs. Not agreeing Central Excise Appeal No. 160 of 2010 3 with the reply furnished on behalf of the appellant, the respondent imposed penalty of Rs. 82,85,894/-upon the appellant, vide order dated 28.6.2004. While doing so, the respondent observed that the appellant actively connived and abated with M/s. Asian Alloys Limited in fraudulent availment of the Cenvat Credit by the said firm. The appellant was actively involved in removing and selling of excisable goods manufactured by M/s. Asian Alloys Limited which it knew were liable for confiscation and, thus, it was liable for penal action under Rule 173Q of the 1944 Rules and Rule 25 of the 2001 Rules. 5. Aggrieved by the order dated 28.6.2004, the present appellant filed appeal before the Tribunal. It was contended before the Tribunal on behalf of the appellant that penalty could not have been imposed and in support of its submission, reliance was placed on a larger Bench of the Tribunal in the case of Steel Tubes of India Limited Vs. Commissioner of Central Excise, Indore, 2007 (217) ELT 506 (Tri-LB). The Tribunal, however, did not agree with the pleas so raised on behalf of the appellant, so far as the question of imposition of penalty is concerned, but reduced the penalty to 10% of the penalty imposed vide order-in-original, dated 28.6.2004 passed by the Commissioner, Central Excise, Chandigarh. While doing so, it was observed by the Tribunal that the goods supplied by registered dealers and washer manufacturing units were diverted, which were liable for confiscation and, thus, imposition of penalty was justified. 6. We have heard learned counsel for the appellant and have perused the record. Central Excise Appeal No. 160 of 2010 4 7. Learned counsel for the appellant fairly states that the issue raised in the present appeal has been adjudicated against the assessee in Central Excise Appeal No. 7 of 2010, decided today and the appeal has been dismissed. Para 10 of the said order reads thus:- “In spite of non applicability of rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty.” 8. Accordingly the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) March 17, 2011 JUDGE *rkmalik*