Tribunal Upholds Commissioner's Order Dismissing Appeal Against Fraudulent Invoices

The Tribunal upheld the Commissioner's order, dismissing the appeal filed by M/s Subodh Steels. The fraudulent activities of M/s Rohit Ispat in issuing fake invoices were confirmed, along with the involvement of M/s Subodh Steels. The order was pronounced on 11.08.2017.

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Issues Involved:
1. Fraudulent registration and issuance of Cenvat Credit invoices by M/s Rohit Ispat.
2. Admissibility of Cenvat Credit based on fake invoices.
3. Liability and penalty on M/s Subodh Steels for issuing invoices without actual receipt/storage/dispatch of goods.
4. Relevance of prior judgments and legal precedents.
5. Request for cross-examination of investigating officers.

Detailed Analysis:

1. Fraudulent Registration and Issuance of Cenvat Credit Invoices by M/s Rohit Ispat:
The case revolves around M/s Rohit Ispat, a first-stage dealer, who fraudulently obtained registration under the Central Excise Rules, 2002. The registration was based on a fake and forged rent deed. M/s Rohit Ispat issued Cenvatable invoices without having any office or godown to store excisable goods and did not maintain or produce records before the investigation officers. The investigation revealed that the goods purportedly cleared by M/s Rohit Ispat were actually foundry grade II low manganese Pig Iron, which was unsuitable for the claimed end use. The proprietor of M/s Rohit Ispat, Sh. Suresh Yadav, admitted that the trading activities were only paper transactions without any actual goods.

2. Admissibility of Cenvat Credit Based on Fake Invoices:
The Tribunal referred to the findings of the Commissioner, which highlighted that M/s Rohit Ispat did not exist at the registered premises, and the registration was canceled retrospectively. The Tribunal emphasized that the fake invoices issued by M/s Rohit Ispat were inherently null and void, and no credit of duty could be taken on such fake invoices. The Tribunal cited the case of ICI India Limited vs. CC, Calcutta, which held that fake documents are ab initio unlawful and void.

3. Liability and Penalty on M/s Subodh Steels:
M/s Subodh Steels, a second-stage dealer, received Cenvat Credit invoices from M/s Rohit Ispat and further passed on the credit to two manufacturers. The Department provided sufficient evidence that M/s Rohit Ispat had no godown and the transactions were only on paper. The Tribunal found that M/s Subodh Steels was part of the fraudulent activity and issued invoices without actual receipt/storage/dispatch of pig iron. The penalty was imposed under Rule 26(2) of the Central Excise Rules for issuing Cenvat Credit invoices without actual receipt/storage/dispatch of goods. The Tribunal rejected the appellant's contention that it was not their responsibility to confirm the godown of the dealer.

4. Relevance of Prior Judgments and Legal Precedents:
The Tribunal referred to several judgments, including Samung India Electronics Ltd. vs. Commissioner of Customs and the case of Chengalvaraya Naidu, to emphasize that fraud vitiates all transactions and judicial acts. The Tribunal also referred to the case of CCE, Jalandhar Vs. J.C.T. Limited, distinguishing it from the present case as there was no allegation of fraud or bogus rent deed in the former.

5. Request for Cross-Examination of Investigating Officers:
The appellant requested cross-examination of the officers who verified the godown of M/s Rohit Ispat. The Tribunal noted that the appellant failed to participate in the original proceedings despite several opportunities, reflecting dilatory tactics. Hence, the request for cross-examination was rejected.

Conclusion:
The Tribunal upheld the order of the Commissioner, finding no infirmity in it. The appeal filed by M/s Subodh Steels was dismissed, and the fraudulent activities of M/s Rohit Ispat and the involvement of M/s Subodh Steels in issuing fake invoices were confirmed. The order was pronounced in the Court on 11.08.2017.

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