Fraudulent Cenvat credit claims upheld on un-retracted statement and paper transactions showing fabricated invoices

Fraudulent availment of Cenvat credit can be sustained where the record shows paper transactions, fabricated Central Excise invoices and no actual movement of goods, and the assessee cannot displace that finding with acceptable documentary evidence. An un-retracted incriminating statement admitting the offence was relied on, and the Tribunal applied the settled principle that such statements remain admissible unless shown to be vitiated by inducement, threat or coercion. On those facts and circumstances, the demand and fraud findings were upheld.

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Issues: Whether the demand and denial of Cenvat credit were sustainable where the assessee was found to have issued fabricated Central Excise invoices and the incriminating statement of a principal person was relied upon.

Analysis: The facts were found to show paper transactions without actual movement of goods, supported by the statement of the concerned person admitting the offence. The recorded statement was not shown to have been retracted, and there was no acceptable documentary basis to displace the finding that the transactions were fraudulent. The Tribunal also relied on the settled position that such statements are admissible unless shown to be vitiated by inducement, threat, or coercion, and that clandestine activity may be established by circumstantial evidence and admissions.

Conclusion: The demand and the findings of fraud were upheld, and the appeal was dismissed against the assessee.

Ratio Decidendi: A finding of fraudulent availment of Cenvat credit can be sustained on the basis of an un-retracted incriminating statement and surrounding circumstances showing paper transactions and fabricated invoices.

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