In Excise Appeal No. 11242 of 2014 -CESTAT- Rule 26(2) of Central Excise Rules cannot be applied retrospectively for transactions prior to April 1, 2007: CESTAT (Ahmedabad)
Member Ramesh Nair (Judicial) [05-07-2023]

Read Order: Goodluck Empire and Ors v. C.C.E. & S.T.-Ahmedabad-III

Chahat Varma

New Delhi, July 10, 2023: In a recent case, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal has ruled that the penal provision, Rule 26(2) of the Central Excise Rules, 2002 cannot be applied retrospectively for transactions prior to 01.04.2007.

The case involved M/s. Goodluck Empire and M/s Jenil Empire (appellants), who were charged with issuing Cenvat Credit invoices without supplying the goods to M/s. Nakoda Alloys Pvt. Ltd. The main party in the case was M/s. Nakoda Alloys Pvt. Ltd., who settled their case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

The single-member bench of Ramesh Nair (Judicial) noted that both the appellants had given inculpatory statements, and the cross-examination did not reveal anything contrary to their statements. This indicated their direct involvement in the fraudulent passing of Cenvat credit to M/s. Nakoda Alloys Pvt. Ltd.

The bench, however, held that Rule 26(2) of the Central Excise Rules, 2002 could only be applied to transactions made after 01.04.2007. Therefore, no penalty could be imposed under this rule for transactions prior to that date.

Thus, the bench held that in the case of M/s. Jenil Empire, where all transactions were conducted before 01.04.2007, no penalty can be imposed. However, in the case of M/s. Goodluck Empire, where some transactions were made after 01.04.2007, the penalty was reduced from Rs. 8,20,000 to Rs. 2,00,000.