Case Law Details
Qumruzzama Khan Vs C.C.E. & S.T.-Vapi (CESTAT Ahmedabad)
The CESTAT Ahmedabad has dealt with an important legal matter between Qumruzzama Khan and C.C.E. & S.T.-Vapi. This case revolves around the imposition of penalties under Rule 26 of Central Excise Rules, 2002, specifically focusing on the liability of parties involved in various activities related to goods that may be confiscated.
Analysis: The case primarily pertains to the applicability of penalties under Rule 26(2)(ii) of Central Excise Rules. The core issue stems from the charge that Nitin Alloys Global Ltd took credit without receiving goods, and the appellants facilitated the fraudulent Cenvat credit.
In the present case the period involved is 2005-06 Rule 26(2)(ii) was inserted vide Notification No.8/2007-CE(NT) dated 01.03.2007 (effective from 01.04.2007), therefore, the provision of Rule 26(2)(ii) cannot be made applicable retrospectively for the period prior to 01.04.2007. For this reason alone the penalties imposed on the appellants are not sustainable.
From the reading of the above Rule, it can be seen that a person can be penalized under this rule, only if he is involved in various activities of handling of goods, which are liable for confiscation. In the present case the entire case of the department is that there is no movement of goods but it is a paper transaction and the M/s Nitin Global Ltd, who has taken Cenvat credit, has not received the goods. When this is the case of the department as no goods is involved, consequently, none of the appellants are engaged in handling the goods which is liable for confiscation.
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