Directorate General of Central Excise Intelligence (Hqrs.), New Delhi, a unit of Central Board of Excise and Customs (CBEC), Department of Revenue, Ministry of Finance recently has booked a case against M/S Bhushan Steels Ltd. (M/s BSL), village-Nifan, near Khopoli, Distt. Raigad (Maharashtra) , a manufacturer of hot/cold rolled ‘galvanized’ products, for fraudulent availment of Cenvat credit on zinc ingots purchased from M/s Hindustan Zinc Ltd.(M/s HZL), Haridwar on the basis of invoices only without actually receiving the goods. Extensive searches were conducted at 14 places across the Five States i.e., Delhi, Maharashtra, U.P., Uttara Khand and Rajasthan including their factory and traders’ godowns at Delhi, Aligarh and Agra and transporter’s offices at Udaipur & Haridwar on 20.03.2013.

Modus operandi adopted was that despite having ‘F.O.R.’ (free on receipt) MOU with M/s HZL in general, M/s BSL arranged their own transportation specifically for Khopoli supplies and entire quantity of zinc so purchased was transported through M/s Mewar Transport Company (Udaipur) and diverted to traders based in Delhi, Agra and Aligarh. After the goods were unloaded at Delhi/Agra/Aligarh godowns of the traders, only invoices and GRs were sent to M/s BSL’s Sahibabad office and then to their Khopoli factory for availing irregular cenvat credit without receipt of goods. Payments were reportedly received in cash for zinc ingots sold to the traders. Entire operation was orchestrated by the Assistant Vice President (Finance) under direct supervision of Vice Chairman-Cum-Managing Director of M/s Bhushan Steels group.

During the intelligence operation, movement of two live consignments of zinc ingots from Haridwar was tracked as a result of which 55.955 MTs of Zinc Ingots valued at Rs.81.79 lakh were traced to the traders’ godown at Aligarh which were seized alongwith the trucks (valued at Rs.29.82 lakh). Similarly, at another trader’s godown at Delhi, 17.183 MTs of diverted zinc ingots valued at Rs.23.54 lakh, were seized.

At the residences of the two traders and AVP (Finance) of M/s BSL, unaccounted cash amounting to Rs.1.92 crore was seized for further enquiry.

During preliminary inquiry, the key officials of M/s BSL including their Vice Chairman-cum-Managing Director,admitted to the modus operandi and an amount of Rs.12.00 crore has been deposited towards their duty liability. Investigation conducted so far indicated irregular availment of Cenvat credit to the tune of Rs.24.00 crore approx.

DSM/RS/ka

(Release ID :96086)

Cenvat credit fraud: invoice-based availment without receipt uncovered via diverted consignments, seizures and enforcement action. Fraudulent availment of Cenvat credit by claiming input tax on zinc ingots based solely on invoices and GRs without receipt of goods; physical consignments were diverted via third-party transport to traders' godowns while invoices were sent to the manufacturer to support irregular credit claims, resulting in seizures of goods, vehicles and unaccounted cash and prompting enforcement and further fiscal inquiry.