The Division Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), ruled that penalty under Rule 26 of Central Excise Rules, 2002 cannot be imposed for issuance of bogus LR when period involved is prior to amendment.
The appellant in the present appeal is Rajesh Kumar Narula. The appeal has been filed againstthe order passed by the Commissioner (Appeals) whereby, the penalty imposed on the appellant under Rule 26(2) was upheld in connection with facilitating fraudulent availment of cenvat credit by M/s. RHJ Extrusion by issuing bogus LR whereas the goods have not been transported under that LR.
V.R. Sethi, Counsel appearing on behalf of the appellant at the outset submitted that the period involved is 2004-05 and at that relevant time there was no provision for penalty under Rule 26(2) which was inserted only by notification no.08/2007 dated 01.03.2007 therefore, merely for issuance of bogus LR will not attract penalty under Rule 26(1) at the most it will fall under Rule 26(2) which was not in existence at the relevant time.
The Coram consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “The offence of issuing bogus LR can at the most fall under the provision of Rule 26(2) of Central Excise Rules, 2002. However, the said provision has come into effect from 01.04.2007 as per the notification no. 08/2007 dated 01.03.2007 therefore, penalty for the offence like issuance of bogus LR shall not attract penalty at the relevant time.”
“The period involved is prior to amendment to Rule 26 effective from 01.04.2007, the penalty under Rule 26 cannot be imposed only for issuance of bogus LRs therefore, following this tribunal decision dated 25.04.2019 in the present case also, the penalty is not sustainable hence the same is set aside” the Tribunal noted.
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