Penalty under Rule 26 will not sustain in the absence of Actual Clearance of Goods: CESTAT [Read Order]

Penalty - Rule 26 - clearance of goods - CESTAT - Taxscan

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that penalty under rule 26 will not sustain in the absence of actual clearance of goods.

The appellant challenged the order of the Commissioner (Appeals) upholding the penalty imposed by the Adjudicating Authority under Rule 26 of Central Excise Rules, 2002 for the charge of Abetment in passing of fraudulent Cenvat Credit without the supply of goods by M/s Shah Foils Ltd., to M/s Bluplast Industries Ltd.    

These cases were made out under a common investigation carried out against the main case of M/s. Shah Foils Ltd and both the appellants were charged as they have facilitated Bluplast Industries Ltd. for taking fraudulent Cenvat Credit on the invoices issued by M/s Shah Foils Ltd. without the supply of the goods. The appellant stated that the M/s. Shri Ram Steels has carried out the job work on the goods supplied by M/s Shah Foils Ltd on behalf of M/s Bluplast Industries Ltd., which has been done by the procedure under Rule 4(5) (a).

The appellant contended that he has acted as a broker for the supply of goods by M/s Shah Foils Ltd. to M/s Bluplast Industries Ltd. There was no evidence at the Appellant’s end that they issued any invoice without delivery of goods.

Mr Ramesh Nair, Judicial Member observed that the contention of the revenue is not sustainable regarding the charge of issuance of invoices without actual clearance of goods for which the appellant has imposed penalty under Rule 26.

The Tribunal set aside the penalties and allowed the appeals. Shri Shailesh Sheth appeared for the Appellant and Shri Vinod Lukose appeared for the Respondent.

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