2017 (10) TMI 1429 - CGOVT - Central Excise

Court invalidates duty rebate due to fraudulent credit use, settlement reached, export duty remains disputed.

The court deemed the rebate of duty granted earlier as erroneous due to fraudulent availment of Cenvat credit. The duty paid on exported goods from ... CENVAT Credit - export of goods - duty on exported goods paid from wrongly availed Cenvat credit - Held that:- The Government has noticed that the applicant has also not disputed the fact that duty paid by them on exported goods was actually from the fraudulently availed credit as held by the Commissioner (Appeals). But still in the Revision Application the applicant has stressed that the Cenvat credit wrongly availed by them has already been paid by them as per order of the Settlement Commission and after having done so the duty paid on exported goods from even wrong Cenvat credit cannot be said to be paid from inadmissible credit. But the Government does not find any substance in this argument as the fact still remains that the exported goods remained non-duty-paid goods even after payment of an amount as per Settlement Commission’s order. The order passed by the Settlement Commission is only to settle the tax dispute and it cannot regularise the fraudulent actions of the applicant from the retrospective effect - Thus, the Government finds no fault in the observation of the Commissioner (Appeals) that the Cenvat credit used to discharge the duty on export goods was non-existent in the applicant’s account and thus no rebate claim is justified on such duty. The Government does not find any fault in Commissioner (Appeals)’s Order - the Revision Application filed by the applicant is rejected. Issues:1. Rebate of duty granted earlier by Assistant Commissioner deemed erroneous.2. Regularization of duty paid on exported goods from wrongly availed Cenvat credit.3. Validity of rebate claim sanctioned by Assistant/Deputy Commissioner.4. Dispute over duty payment on exported goods from fraudulently availed credit.5. Settlement Commission's order and its impact on duty payment regularity.6. Justification of rejecting Revision Application by Government.Analysis:Issue 1: The rebate of duty granted earlier by the Assistant Commissioner was deemed erroneous due to a case of fraudulent availment of Cenvat credit against the applicant.Issue 2: The applicant argued that the duty paid on exported goods from wrongly availed Cenvat credit was regularized after settling the amount with the Settlement Commission.Issue 3: The rebate claims of the applicant were initially sanctioned by the Assistant/Deputy Commissioner, but the Anti Evasion Branch later found fraudulent availment of Cenvat credit, leading to the appeal against the Assistant Commissioner's orders.Issue 4: The duty payment on exported goods from fraudulently availed credit was disputed, with the Government asserting that the duty remained unpaid despite Settlement Commission's order regularizing the tax dispute.Issue 5: The Settlement Commission's order was found to settle the tax dispute but not regularize the applicant's fraudulent actions, as observed by the Government and the Settlement Commission.Issue 6: The Government rejected the Revision Application, affirming the Commissioner (Appeals)'s order that no rebate claim was justified on duty paid using non-existent Cenvat credit, emphasizing that the duty on exported goods remained unpaid despite Settlement Commission's intervention.