The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under section 26(2) of the Central Excise Rules, 2002 does not apply to transactions made before 01.04.2007.
Goodluck Empire, the appellant challenged the order in which the penalty under Rule 26 of Central Excise Rules, 2002 was imposed for a charge of issuing Cenvat Credit invoices in favour of M\s Nakoda Alloya Pvt. Ltd. Without supplying the goods for fraudulent passing of Cenvat credit.
Shri, Sarju Mehta, Chartered Accountant, appearing for the appellant submitted that no proper cross-examination was conducted by the Adjudicating Authority, therefore, the statements given by the appellants cannot be taken as evidence and in these cases for the imposition of penalty only statements were relied upon.
In the main case of M\s Nakoda Alloys Pvt. Ltd. the said company got their case settled under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and this Tribunal vide order No. A/12309/2021 dated 01.02.2021 disposed of the appeal as withdrawn in terms of Section 127(6) of Chapter V of Finance (No. 2) Act, 2019.
It was submitted that the penalty was imposed under Rule 26(2) of Central Excise Rules, 2002 whereas this Rule came into force only from 0104-2007. Therefore, for the transaction about the period before 01.04.2007, no penalty can be imposed.
The Adjudicating authority has conducted the cross-examination though some discrepancy was raised by the Chartered Accountant during the hearing before the Adjudication authority the fact that the cross-examination has been conducted and nothing contrary to the statement given under Section 14 of the Central Excise Act, 1994 by the present appellants have come on record.
A single-member bench comprising Mr Ramesh Nair, Member (Judicial) found that penalty was imposed under Rule 26(2) of Central Excise Rules, 2002 which has come into force with effect from 01.04.2007. Therefore, for all the transactions made before 01.04.2007, the Penal Provision Rule 26(2) cannot be applied retrospectively. Therefore, in respect of the transactions only made after 01.04.2007 the penalty under Rule 26(2) of Central Excise Rules, 2002 shall be applicable.
Further held that some of the transactions made after 01.04.2007 by the appellant are liable to penalty under Rule 26(2) of Central Excise Rules, 2002. Accordingly the penalty of M/s. Goodluck Empire is reduced from Rs. 8,20,000/- to Rs. 2,00,000/- and partly allowed the appeal.
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