Fake Invoice Case: CESTAT Sets Aside Rs. 50k Penalty Imposed on Broker [Read Order]
SUMMARY: The Tribunal held that since the main dealers were exonerated and the broker never possessed the goods, the penalty imposed under Rule 26 of the Central Excise Rules was not sustainable.
![Fake Invoice Case: CESTAT Sets Aside Rs. 50k Penalty Imposed on Broker [Read Order]](https://images.taxscan.in/h-upload/2026/04/14/2133063-invoicejpg.webp "Fake Invoice Case: CESTAT Sets Aside Rs. 50k Penalty Imposed on Broker [Read Order]")
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Regional Bench, allowed the appeal by setting aside a penalty of Rs. 50,000 imposed for alleged involvement in issuing fake invoices without the supply of goods. The case originated from an investigation into scrap traders M/s Sai Steel Traders, M/s Sai Multimetals, and M/s Yashoda Traders, who were...
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Regional Bench, allowed the appeal by setting aside a penalty of Rs. 50,000 imposed for alleged involvement in issuing fake invoices without the supply of goods.
The case originated from an investigation into scrap traders M/s Sai Steel Traders, M/s Sai Multimetals, and M/s Yashoda Traders, who were accused of selling scrap to re-rolling units without invoices and issuing fake invoices to furnace units without actual supply.
The appellant, Shri Pankaj Goyal, is a broker and was implicated for allegedly acting as an agent and facilitating these transactions. Based on these allegations, the Principal Commissioner confirmed a penalty of Rs. 50,000 against the appellant under Rule 26(2) of the Central Excise Rules, 2002.
The Revenue argued that the appellant aided the traders in selling excisable invoices without the supply of goods and was therefore liable to penalty under the law.
The Tribunal noted that the appellant merely acted as a commission agent or broker between buyers and sellers. It was observed that he never had possession of the goods at any point in time, nor was he registered with the Central Excise Department.
The Division Bench of S. S. Garg (Member Judicial) and P. Anjani Kumar (Member Technical) relied on a previous decision of the Tribunal (Final Order No. 60932-60996/2019) wherein the appeals of the main scrap dealers the alleged principals of the appellant had been allowed and the orders against them set aside.
The Tribunal held that Rule 26 penalises persons concerned with handling or possessing goods or issuing invoices without delivery. Since the main dealers had been exonerated and the appellant never dealt with the goods, he could not be held liable for penalty. The Tribunal found that once the order against the main dealers was set aside, no penalty could be imposed on the alleged agent.
The Tribunal set aside the penalty and allowed the appeal.Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
