TaxTMI 
TaxTMI 
2010 (2) TMI 847
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...., 25-11-04 108, 16-5-04 109, 16-5-04 5350416, 25-8-04 MUM/DXB/ 12867, 8-9-04 1495879/- 2 3725, 25-11-04 116, 17-5-04 117, 17-5-04 5351546, 1-9-04 MUM/PKG/4023, 16-9-04 289994/- 3 3726, 25-11-04 117, 17-5-04 118, 17-5-04 5351549, 16-9-04 MUM/PKG/4023, 14-9-04 302415/- 4 3809, 30-11-04 109, 16-5-04 110, 16-5-04 5350727, 16-9-04 MUM/SIN/4018, 16-9-04 359085/- 5 3810, 29-11-04 110, 16-5-04 111, 16-5-04 5350743, 27-8-04 MUM/SIN/4018, 16-9-04 283685/- 6 3811, 30-11-04 112, 16-5-04 113, 16-5-04 53503411, 25-8-04 MISCBOM000013373, 11-9-04 449307/- 7 4313, 29-12-04 25, 23-4-04 25, 23-4-04 5358650, 8-9-04 MISCBOM000013531, 11-9-04 358238/- Total 2538603/- 3. A deficiency Memo-cum-Show Cause Notice-cum-Call for personal hearing was issued to the claimant vide letter dated 5-5-05 requesting them to submit the copy of the acknowledgement of prior intimation given to jurisdictional Superintendent/Assistant Commissioner/Dy. Commissioner with respect to clearance of the goods in ques....
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.... In view of this also, the orders passed by the lower authorities are not sustainable in law. 5.3 The applicant submits that the lower authorities have travelled beyond the scope of the show cause notice by giving finding that the supplier of the goods had taken wrong Modvat credit for which the applicant cannot be punished. In view of this also, the orders passed by the lower authorities are not correct and required to set aside in the interest of justice. 6. The case was listed for personal hearing on 27-10-09, 16-12-09 and 18-12-09. Sh. K.I. Vyas, Advocate appeared on 18-12-09 on behalf of the applicant and reiterated the grounds of revision applications. Nobody appeared on behalf of the respondent. 7. Government has considered the relevant case records, the records of personal hearing and also perused the impugned order-in-original/appeal. 8. From the perusal of records. Government observes that the applicant has filed the revision application after the expiry of 3 months as stipulated in Section 35EE of the Central Excise Act, 1944 and requested for condonation of delay. The relevant Section 35EE(2) of Central Excise Act, 1944 reads as under : ....
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.... on the basis of fake and bogus invoices during the period May, 2003 to Nov, 2004. The manufacturer had not taken reasonable steps as per Rule 7 of Cenvat Credit Rules, 2002 to satisfy about identity and addresses of manufacturers who issued the Central Excise invoices to them. Commissioner (Appeals) rejected the appeal of department and upheld the order-in-original. Thereafter department filed revision application with Central Government mainly on the same grounds. The Government of India in its above said Order No. 304-307/07, dated 18-5-07 decided the issue holding that merchant-exporter cannot be denied rebate claim in such circumstances when manufacturer had availed Cenvat credit wrongly on the basis of bogus invoices and there is no charge of any mutuality of interest, financial control, flow back of funds and non bona fide nature of transactions between the merchant-exporter and manufacturer/supplier of goods and rejected the revision application of department. 12. The operative portion of said order is re-produced below :- "5. Govt. has considered the submissions both written and oral made by the applicant-Commissioner as well as by the respondent. It is obs....
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....ame for duty payment of goods exported by the respondent merchant exporter. In this regard, Govt. observes that sufficient legislative and machinery provisions exist in Central Excise Act/Rules to recover such allegedly wrongly availed and utilized credit from the manufacturer supplier of finished goods atong with interest and penalty. Rule 14 of Cenvat Credit Rules, 2004 provides that where Cenvat Credit has been taken or utilized wrongly, it has to be recovered from the manufacturer along with interest and provisions of Sec. 11A (recovery of duties not levied or not paid or short-paid or erroneously refunded) and 11AB (interest on delayed payment of duty) of the Act shall apply mutatis mutandis for effecting such recoveries Rule 15 of Cenvat Credit Rules provides if any person takes Cenvat Credit wrongly or without taking reasonable steps to ensure that duty has been correctly paid on goods as indicated in accompanying documents as per Rule 9, he shall be liable to penalty not exceeding the duty involved on excisable goods in respect of which contravention is committed. As in the instant case where duty has been collected from the exporter respondent but allegedly not paid to gov....
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....Delhi-I, the common issue involved is whether the Modvat credit is to be disallowed to all the appellants on the ground that the supplier of the inputs has taken the Modvat credit on fake and bogus invoices and utilized the said credit towards payment of duty in respect of inputs supplied to the appellants. 2. The appellants availed of Modvat credit of the duty paid on the inputs received from the suppliers, that one of the supplier of inputs is M/s. Prerna Metal Industries; that the inquiries initiated against the said Prerna Metal Industry revealed that they had taken the Modvat credit on the strength of invoice which were fake and bogus and were never issued to M/s. Prerna Metal Industry by any of the firms whose name were mentioned in the invoices; that the Commissioner under the impugned order has disallowed the Modvat credit amount to Rs. 46,78,462/- to M/s. Parerna Metal Industry and ordered to recover the amount of Rs. 43,99,947/- passed as illegal Central Excise duty to various buyers besides imposing penalty on Prerna Metal Inds. That the Commissioner has also disallowed the Modvat Credit availed by the appellants on the basis of invoices issued by Prerna Metal In....
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....ppropriate duty of excise as indicated in the documents has been paid. In the instant case, the manufacturer supplier M/s. Ashapura Textile Industries as alleged had failed to take such reasonable steps for verifying addresses of manufacturers who issued invoices to them. As per ratio of various decisions discussed above, it is, however observed that action for not taking such reasonable steps as alleged definitely lies squarely on the manufacturer supplier but not on the applicant/merchant exporter who at third stage purchased the goods bona fidely in normal course of commercial activity and exported them on the strength of clearances to them on ARE-1s and Central Excise Invoices indicating duty payment particulars showing all other details of manufacturers addresses, value etc. and the entire amount inclusive of duty has also been paid by them to supplier manufacturer. The applicant merchant exporter under the circumstances cannot be held responsible for having not taken adequate reasonable steps in terms of Rule 9 of Cenvat Credit Rules, 2004 provides that manufacturer taking credit is deemed to have taken reasonable steps if he satisfies himself about identity and address of th....
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....r/manufacturer under cover of proper Central Excise documents, including invoices showing duty payment particulars and payment has been made of entire amount inclusive of duty and goods exported as per prescribed procedure, it will be legally incorrect to deny him the benefit of rebate in case there is no charge that the transaction between the supplier and exporter was not at arms length, or non bona fide or the exporter had any nexus/connivance or any other role to play in the alleged wrong procurement of inputs by the supplier/manufacturer on bogus invoices. There is no such charge or ground in the Revision Application as also in orders of Commissioner (Appeals)/orders of Adjudicating Authority. As already discussed legal provisions exist in the Central Excise Act, 1944 and Cenvat Credit Rules, 2004 for recovery of such alleged wrongly availed credit from the supplier/manufacturer along with interest and penalty but the respondent/exporter in the facts and circumstances already discussed cannot also be denied his otherwise legitimate rebate claim. 10. Under the facts circumstances pertaining to the case as discussed above, no infirmity is found both in the orders of Adju....