The penalty under Rule 26 will not be maintained in the absence of effective customs clearance of the goods: CESTAT

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

The Customs, Excise and Service Tax Appeals Tribunal (CESTAT), Ahmedabad Bench, has ruled that the penalty under Rule 26 will not stand in the absence of effective clearance of the goods.

The Appellant challenged the Order of the Commissioner (Appeals) upholding the penalty imposed by the Contracting Authority under Rule 26 of the Central Excise Rules 2002 for the charge of inducing the transmission of credit Fraudulent cenvat without supply of goods by M/s Shah Foils Ltd., to M/s Bluplast Industries Ltd.

These cases were established as part of a joint investigation against the main case of M/s. Shah Foils Ltd and the two appellants were charged with facilitating Bluplast Industries Ltd. for taking fraudulent Cenvat credit on invoices issued by M/s Shah Foils Ltd. without the supply of the goods. The caller stated that the M/s. Shri Ram Steels carried out the work on the goods supplied by M/s Shah Foils Ltd on behalf of M/s Bluplast Industries Ltd. which was done under the procedure set out in Rule 4(5)(a).

The appellant argued that he acted as a broker for the supply of goods by M/s Shah Foils Ltd. to M/s Bluplast Industries Ltd. The appellant has no evidence that he issued an invoice without delivery of goods.

Judicial Member Mr. Ramesh Nair pointed out that revenue affirmation is unsustainable with respect to the burden of issuing invoices without actual clearance of goods for which the appellant has imposed a penalty under rule 26.

The Tribunal quashed 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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Atul Madhavji Parekh vs CCE & ST-Daman

Counsel for the Appellant: Shri Shailesh Sheth

Counsel for the Respondent: Shri Vinod Lukose

REFERENCE: 2022 TAXSCAN (CESTAT) 338

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