2015 (9) TMI 247 - AT - Central Excise

Tribunal Upholds Denial of Modvat Credit for Fraudulent Transactions

M/s. Bhanu Iron & Steel Co. Ltd., Shri Y.S. Bisht, Deputy GM, Sh. Anoop Bishnoi, MD, M/s. Belvedere Engineering Ltd., M/s. Bharat Indl. Structural Constructions Ltd., M/s. United Alloys Ltd., M/s. Bhanu Iron & Steel Co. Ltd. Versus CCE, Indore

M/s. Bhanu Iron & Steel Co. Ltd., Shri Y.S. Bisht, Deputy GM, Sh. Anoop Bishnoi, MD, M/s. Belvedere Engineering Ltd., M/s. Bharat Indl. Structural ... Issues Involved:1. Fraudulent Availment of Modvat Credit2. Non-Receipt of Inputs and Capital Goods3. Seizure of Excess Stock4. Non-Supply of Non-Relied Upon Documents5. Invocation of Extended Period of Limitation6. Penalties and ConfiscationDetailed Analysis:1. Fraudulent Availment of Modvat Credit:The appellants, M/s. Bhanu Iron and Steel Co. Ltd., were accused of fraudulently availing Modvat credit on inputs and capital goods without actual receipt of the goods. The investigation revealed that the company procured duty-paying documents without the actual receipt of inputs/capital goods. The Central Excise authorities conducted searches and found significant discrepancies in stock records. The investigation confirmed that the company availed credit on the strength of fake invoices and documents, as corroborated by the statements of various suppliers, transporters, and company officials.2. Non-Receipt of Inputs and Capital Goods:The investigation revealed that the goods purportedly received by the appellants were never actually transported. The vehicles mentioned in the invoices were found to be incapable of carrying the goods, as they were two-wheelers, buses, cars, tractors, and other non-commercial vehicles. Statements from transporters and Regional Transport Authorities confirmed that no goods were transported to the appellants' factory. Additionally, the suppliers were found to have no manufacturing facilities to produce the inputs in question.3. Seizure of Excess Stock:During the physical verification of stock, the authorities found a shortage of 2620.800 MT of M.S. Slabs and an excess of 76.628 MT of M.S. Plates, which were seized. Further verification revealed an excess of 86.120 MT of waste/scrap, which was also seized. The appellants admitted the discrepancies and paid a total of Rs. 68 lakhs towards the duty evaded.4. Non-Supply of Non-Relied Upon Documents:The appellants contended that they were not provided with non-relied upon documents, which hindered their defense. However, the adjudicating authority made several attempts to provide these documents, and the appellants were found to be delaying the proceedings. The Tribunal observed that the appellants' plea lacked substance and noted that serious fraudulent irregularities were causing subterfuge to the Revenue.5. Invocation of Extended Period of Limitation:The appellants argued against the invocation of the extended period of limitation, contending that the demand should be restricted to the normal period of six months. However, the Tribunal found that the fraudulent nature of the transactions, coupled with misstatements and suppression of facts, justified the invocation of the extended period. The Tribunal cited relevant case law to support this position.6. Penalties and Confiscation:The adjudicating authority imposed penalties and ordered the confiscation of goods, land, building, plant, and machinery. The appellants were given the option to redeem the confiscated goods on payment of a redemption fine. Penalties were also imposed on various company officials and co-noticees. The Tribunal upheld these penalties, noting the overwhelming evidence of fraud and the appellants' intent to defraud the Revenue.Conclusion:The Tribunal dismissed the appeals, upholding the findings of the adjudicating authority. The detailed investigation and confessional statements confirmed the fraudulent nature of the transactions, leading to the denial of Modvat credit and the imposition of penalties. The Tribunal emphasized that the appellants' actions were premeditated and aimed at defrauding the Revenue, and thus, the penalties and confiscations were justified.