The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) observed that the benefit of the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDR) scheme cannot be denied just because of non-filing of declaration.
M/s JPFL Films Private Limited, the appellants challenged the impugned order No.09/LDH/2011 dated 31.03.2011 and claimed to have been communicated on 09.05.2011. On initiating an investigation into M/s Cannon Industries Private Limited; on searching various premises and on recording statements of various persons, Revenue concluded that M/s Cannon India Private Limited had availed CENVAT credit fraudulently without actually receiving the goods in their factory.
A show-cause notice was issued to M/s Cannon India Private Limited seeking to recover credit of Rs.5,59,50,128/- along with interest and penalty; seeking to levy penalty on 39 suppliers, of the goods, under Rule 26 of Central Excise 2002, on the allegation that they have connived with M/s Cannon India Private Limited. M/s Cannon India Private Limited has settled the case with revenue under SVLDR Scheme. The appellants have not applied for settlement and have approached this Bench with this set of appeals.
The appellants submitted that the SVLDR Scheme provides for relief for penalty where there is no duty involvement; the fact that they have not applied for the Scheme should not come in the way of getting the relief that is rightfully due to them; they submit that the Tribunal in a series of judgments has taken this stand and has extended relief to the assessees.
It was submitted that there is a contradiction in the Department’s stand on the issue. On the one hand, the Department alleges that no goods were transported and on the other hand, the penalty is proposed to be levied under Rule 26 of Central Excise Rules, 2002 wherein penalty can only be imposed on persons who have dealt with excisable goods in any manner.
It was submitted that the penalty for issuing only an invoice without a supply of goods is made punishable by insertion of sub-Rule 2 of Rule 26 of Central Excise Rules, 2002 w.e.f. 01.03.2017, the Department chose to impose the penalty retrospectively i.e. for the period before 01.03.2017.
The Department stated that the appellants have not made the declaration as required under the SVLDR Scheme; Department relies on Section 125 of the Finance Act, 2019 and Rule 3 of the Rules made under the Scheme and submits that declaration is to be submitted case-wise and therefore, each of the appellants require to file a declaration and therefore, there is no automatic immunity to the conoticees when the main noticee settles the duty and penalty under the Scheme.
A two-member bench comprising Mr S S Garg, Member (Judicial) and Mr P Anjani Kumar, Member (Technical) observed that the benefit of the Scheme cannot be denied to the appellants just because they did not file the declaration under the SVLDR Scheme. The CESTAT allowed the appeal.
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