ORDER
Jyoti Balasundaram, Member (J)
1. The above appeals arise out of the order dated 29-6-2000 passed by the Commissioner of Central Excise, Chandigarh under which he has imposed a penalty of Rs. 64 lakhs on appellant No. 1, in terms of Rule 173Q(1)(bb) and (d) of the Central Excise Rules. Penalty has been imposed for the reason that appellant No. 1 who is a registered dealer in continuous cast electrolytic copper wire rods, copper scrap, brass scrap, zinc ingots, etc. issued Modvatable invoices to various buyers without physically first bringing the goods into their registered godown as required under the Central Excise Rules and then issuing invoices, and in certain other cases they issued only paper invoices to certain manufacturers of metal/buyers in the States of Punjab and Haryana without actually despatching the goods covered by the invoices to them, and disposing of such goods to other buyers, thus deliberately and intentionally facilitating the buyers/manufacturers to avail inadmissible credit of duty paid on such goods. A penalty of Rs. 64 lakhs has also been imposed on Shri Om Prakash Gandhi, Manager and General Power of Attroney holder of M/s. Shobhit Impex under Rule 209A, and a penalty of Rs. 20,000./- has been imposed on Shri Sanjeev Kumar, clerk of M/s. Gandhi Chemfert Industries (of which Shri Om Prakash Gandhi is the Managing Partner) under Rule 209A of the Central Excise Rules.
2. We have heard Shri G .S. Bhangoo, learned Counsel and Shri Mewa Singh, learned SDR. We see substance in the submission of the learned Counsel that the Rules under which penalty has been imposed upon appellant No. 1 are not attracted in this case. Rule 173Q(1)(bb) provides that “if any manufacturer, producer, registered person of a warehouse or a registered dealer takes credit of duty or money in respect of inputs or capital goods for being used in the manufacture of final products or capital goods for use in the factory of the manufacturer of final product, as the case may be wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the invoice or any other document approved under these rules evidencing the payment of excise duty or the countervailing duty, as the case may be, accompanying thereof, or takes credit of duty or money which he knows or which he has reason to believe, is not permissible under these rules, or does not utilise the inputs or capital goods in the manner provided for in these rules, or utilises credit of duty or money in respect of inputs or capital goods in contravention of any of the provisions of these rules, or does not render proper and true account of the receipt and disposal of the said inputs or capital goods and the credit of duty or money taken thereon as required under these rules, or contravenes any of the provisions contained in Section AA or AAA or AAAA of Chapter V of these Rules”, he shall be liable to a penalty not exceeding 3 times the value of the excisable goods or Rs. 5,000/- whichever is greater. None of the ingredients of this sub-rule are attracted against appellant No. 1 who is a registered dealer further, the Commissioner has not spelt out the exact nature of the contravention, beyond holding that appellant No. 1 has contravened Rule 57G of the Central Excise Rules which falls under Section AA of Chapter V of the Rules. It is also to be noted that the charge against appellant No. 1 attracts the ingredients of Sub-rule (1)(bbb) of Rule 173Q after its amendment on 21-7-1999 so as to cover a situation where any of the categories of the persons enumerated in the Rule wilfully enters any wrong or incorrect particulars in the invoices issued for excisable goods dealt with by him with intent to facilitate the buyer to avail of credit of duty of excise or additional duty in respect of such goods which is not permissible under these Rules. However, we are not concerned in the present case with Rule 173Q(1)(bbb) for the reasons that neither was this sub-rule invoked against appellant No. 1 in the show cause notice nor is it the provision under which penalty has been imposed and further this sub-rule as it stood during the period in dispute, did not cover a situation where the buyers’ availment of credit of additional duty was facilitated, and covered only a situation where the buyers’ availment of credit of excise duty was facilitated. Coming to Rule 173Q(1)(d), we are of the view that it is not applicable to appellant No. 1 since the question of intention to evade payment of duty does not arise as no duty liability is cast upon him. A registered dealer contravening any provisions of the Rules could be held liable to penalty only if the act of facilitating another person to evade payment of duty had been incorporated in Rule 173Q(1)(d); but this clause does not cover any act of abetment or facilitation.
3. In the light of the above discussion, we hold that penalty imposed upon appellant No. 1 cannot be sustained and accordingly set aside the same. Penalty on the other 2 appellants is also set aside since it has been imposed under Rule 209A while the show cause notice proposes penal action under Rule 173Q and there is a vast difference between the two Rules. In the result, we set aside the impugned order and allow all three appeals.