CESTAT upholds Penalty imposed for Confiscation of Goods on ground of passing of CENVAT credit of Custom Duty through Fake Invoices [Read Order]

The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the penalty imposed under section 11AC of the Central Excise Act,1944 for confiscating goods on the ground of passing of CENVAT credit through fake invoices. 

Metal Alloys Industries, the appellant assessee was engaged in the manufacture of copper rods, lead alloys, ingots, re-melted copper ingots, and re-melted lead ingots falling under Chapters 74 and 78 of the First Schedule to the Central Excise Tariff Act, 1985, and was registered under the Central Excise Act and for service tax with Registration. 

The assessee appealed against the order passed by the Commissioner (Appeals) for imposing of penalty for the confiscation of goods by the assessee. 

Jitendra Singh, the counsel for the assessee contended that merely because an entry could not be made in the register, the goods cannot be termed as unaccounted and the omission if any was only a failure to make the entry of the goods in the production register and such omission being of technical nature at best can fall under the ambit of rule 27 of the Central Excise Rules, 2002. 

Mahesh Bhardwaj, the counsel for the department contended that the assessee was indulging in suppressing the production of finished goods and clearance of finished goods with the fraudulent intention of passing the CENVAT Credit in contravention of the provisions of Rules 4,8,10 & 11 of Central Excise Rules. 

The Bench observed that the assessee was registered with the Excise Department as a ‘manufacturer’ and it was not open to the assessee to change his status now as a dealer just to escape from the clutches of law. 

Also held that the lead ingots seized were rightly confiscated and the redemption fine as well as the penalty imposed under Section 11 AC of the Central Excise Act read with Rule 25 of Central Excise Rules was justified and sustainable. 

A single-member bench comprising Binu Tamta (Judicial) held that the decision made by the Commissioner (Appeals) was as per the law while dismissing the appeal filed by the assessee. 

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