2016 (3) TMI 306 - AT - Central Excise

Appeal dismissed in fraudulent invoice penalty case. Upheld penalty highlights confessional statements importance.

M/s. Sunil Steel Sales Versus Commissioner, Customs & Central Excise, Indore

The appeal against the penalty imposed on the appellant for issuing fraudulent invoices, resulting in the misuse of CENVAT credit, was dismissed. Despite ... Penalty on act of omission and commission - CENVAT Credit on the basis of invoices issued by the appellant under which no goods were supplied - Held that:- The facts that the statements were claimed to have been retracted almost 16 days after they were recorded is a clear indication that such retractions was merely an afterthought. If the statement had been recorded under duress, the retraction would have followed immediately. Indeed, there is no basis/ ground mentioned in the appeal to infer that the statements were not voluntary. A bald retraction so late thus doesn't take away evidentiary value of the said statements. In the case of Vinod Solanki Vs. G.O.I (2008 (12) TMI 31 - SUPREME COURT ), held that mere retraction of confession is not sufficient to make confessional statement irrelevant. It has been held by Supreme Court in the case of K.I. Pavunny Vs. Astt Collector Cochin [1997 (2) TMI 97 - SUPREME COURT OF INDIA ] that confessional statement, if found voluntarily, can form the sole basis for conviction. Needless to say that rigor of evidence required for imposition of penalty is less than that required for conviction as for penalty the principle adopted in 'preponderance of probability' while for conviction it is beyond “reasonable doubt”. In the present case, the statements are also corroborated by the evidence in the form of vehicle numbers belonging to vehicles which could not transport such goods in such quantities and also the shortage noticed at the end of the person who took credit on the basis of the aforesaid 23 invoices. - Decided against assessee Issues:Imposition of penalty on the appellant based on fraudulent issuance of invoices leading to CENVAT credit misuse.Analysis:The case involved an appeal against the imposition of a penalty of Rs. 2,21,000 on the appellant for issuing invoices to another company without supplying any goods, resulting in the misuse of CENVAT credit. The investigation revealed discrepancies where the vehicles mentioned in the invoices were incapable of transporting the stated goods, leading to a shortage of goods at the recipient's end. The proprietor of the appellant admitted to issuing these invoices without actual supply of goods, receiving payment through demand draft, and returning the money in cash to the recipient. Despite the absence of representation by the appellant during the proceedings, the case was decided on its merits.The appellant contended that the proprietor had retracted his statements and argued that there were no discrepancies in their accounts, suggesting that the vehicles transporting goods may have used fake numbers. However, the Departmental Representative argued that the retraction occurred weeks later and presented corroborative evidence supporting the voluntariness and accuracy of the initial statements made by the proprietor.Upon considering both sides' contentions, the Member (Technical) noted that the evidence, including the discrepancies in vehicle numbers and the shortage of goods at the recipient's end, supported the initial statements made by the appellant's proprietor. The late retraction of the statements did not diminish their evidentiary value, as established by legal precedents emphasizing the significance of voluntary confessional statements. The Member highlighted that the standard of proof for imposing a penalty is lower than that required for conviction, relying on the principle of 'preponderance of probability.'Ultimately, the Member found no infirmity in the impugned order warranting appellate intervention and dismissed the appeal, upholding the penalty imposed on the appellant for their acts of omission and commission in issuing fraudulent invoices leading to the misuse of CENVAT credit.