Fake Purchase Invoices

[Siraj Shaikh]

There is a Corrugated Boxes Manufacturing Company.-called A-first Party. And there is a Ignots manufacturing-( called B)Company for which the Raw Material is MS Scrap. The Company B receives Fake Purchase Invoices from the Company A, i.e., receipt of Invoices and not receipt of MS Scrap. The Commodity involved is NON-CENVATABLE. What penal action can be taken on the Company A in the light of Excise Laws???????.....ALL THE TRANSACTIONS ARE FAKE.

[YAGAY and SUN]

Well, according to my knowledge any scrap is Excisable w.e.f. 01-04-2008 due to change in the definition of the goods under Central Excise Laws.

Issuing fake invoices amount to an offence.  Penal actions will be taken by the Department.

[Siraj Shaikh]

When the MS Scrap is purchased from the local delaer not regsitered with the Excise Authorities, the Scrap becomes Uncenvatable, ie., Unregistered Dealer cannot charge Excise Duty.....Hence, it becomes Uncenvatable. So, my query is that when a Corrugated Boxes manufacturing company supplies Fake invoices of MS Scrap to the  the  Ignots Manufacturing company, what would be the penal course of action on Corrugated Boxes Manufacturing Company??

[YAGAY and SUN]

Following concequences may be the aftermath of issuing the Fake Invoices, viz:-

1. Directors and every concerned employees may be issued with a SCN and personal penalties may be levied by the Department.
2. Registration Certificate may be cancelled.
3. CENVAT credit may be disallowed and penal actions may be initation against the buyer for collaboration in the offence.
4. Interest @ 18% may be imposed.
5. Directors of the companies may be sent to Jail.
6. Penalty equal to the loss of revenue to the Revenue Department may be levied.

In the nut shell, penal actions will be dependent on the gravity of the matter and allegations freezed in the SCN and defence of the assessee.

 

[MANDAVILLI RAMAKRISHNA]

at first, be advised, never post such fake issues, because you may be given a notice to tell which company is doing this.

 

second thing, department will not bother if the selling dealer pay duty on the value of goods sold by him.

AI Summary

Issuing fake excise invoices can trigger show cause notices, credit disallowance, penalties and possible prosecution.
Issuing fake purchase invoices for MS scrap without actual supply constitutes an excise offence and can trigger a show cause notice, disallowance of CENVAT credit, recovery of tax with interest, cancellation of registration, personal liability for directors and employees, monetary penalties to recoup revenue loss, and possible criminal prosecution; the exact measures depend on the severity of allegations and the assessee's defence, and supplies from unregistered dealers affect CENVAT eligibility.