TaxTMI 
TaxTMI 
2014 (5) TMI 1015
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....ri Ramesh Gupta. 2. The Brief facts of the case are that M/s.Swati Pvt. Ltd., Plot No.44-45, Sector-I Industrial Area, Parwanoo, H.P. were engaged in the manufacture of PVC and HDPE pipes and fittings and sprinkler and drip irrigation systems falling under chapter 39 and 84 respectively of the first Schedule to the Central Excise Tariff Act, 1985. Raw Material used for producing these goods was plastic granules i.e HDPE, LLDPE, PVC Resin etc. procured from IPCL, RIL and GAIL through Registered Dealer namely M/s Karan & Co., Parwanoo. When the goods entered into the State of Himachal Pradesh, Form ST-XXVI-A, as prescribed by the Sales Tax Department of the State, was filed by the owner of goods/carrier and submitted at the Sales Tax Barrier, Parwanoo. 3. Investigation conducted by the DGCEI revealed that the consignments in purchase details of M/s. Karan & Co., Parwanoo as shown in Annexure A & C were not received by them and were also not reflected in Form ST-XXVI-B Register of M/s. Karan & Co., Parwanoo and that M/s. Karan & Co., Parwanoo had not received the goods physically and these consignments appeared mere paper transactions in which M/s. Karan & Co., Parwanoo and M/s.....
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....ii) That ST XXVI-A Forms, prescribed by the State Government is a vital document which is used by the parties for proving movement of the goods from one State to another. Failure to make available such forms attracts tax liability alongwith penal action. In order to prove the movement/carriage of goods, invoices accompanying goods were require to be got entered at Sales Tax Barriers installed by the jurisdictional State Government. iii) That the subject case was booked primarily on the basis of Sales Tax records pertaining to M/s Karan & Co. Parwanoo. As per evidence gathered and confirmed by the Sales Tax Authorities, the said goods have not even crossed the State border on the appointed dates, yet Cenvat Credit was been availed by the party. iv) That, as discussed in the Show Cause Notice and as admitted by M/s Karan & Co. in their reply, ST XXVI-B register is a statutory record prescribed by the Excise and Taxation Department of the Government of Himachal Pradesh required to be maintained by all registered dealers/traders purchasing/ receiving any taxab....
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....on such documents came to the knowledge of the department only when the case of fraudulent availment of MODVAT/Cenvat credit was detected by the DGCEI who issued the Show Cause Notice. Since the party has fraudulently availed the MODVAT/Cenvat credit, the suppression clause has rightly been invoked in the Show Cause Notice. viii) By issuing only invoices without actually receipt and supply of the goods, M/s Karan & Co. have committed fraud. Therefore, they have also rendered themselves liable for penal action for the contraventions of Rules cited in the Show Cause Notice. The basis of non-receipt of the goods have been mentioned above. Ld. DR also submitted that as per Rule 56 of the Himachal Pradesh General Sales Rules, 1970 read with section 22 the Himachal Pradesh General Sales Tax Act, 1968, ST-XXVI-A form was required to be generated/submitted at the barriers/check-posts for the goods entering into/leaving the State of H.P. He submitted that the case was booked primarily based on sales tax records pertaining to M/s. Karan & Co., Parwanoo. As per evidence gathered and confirmed by the sales tax autho....
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....ner that in terms of Excise law, receipt of goods can be established only from statutory records of the Central Excise Department and further, that in the absence of any provision under Central Excise law requiring production of St XXVI-A forms, receipt of goods cannot be disbelieved and credit cannot be disallowed. In my opinion, his observations are too wide to be accepted as laying down any general proposition. Mere fact that entries are made in excise record, does not conclude that inputs have been duly received against invoices once independent and reliable evidence reveals something different indicating misstatement and pointing toward paper transaction. As observed above, the fact of suspicious transaction can be gathered from attending facts and circumstances which would include statutory records maintained under different laws, and therefore, the records maintained in the Excise and Taxation Department of the Government of Himachal Pradesh, though for the purpose of sales tax, cannot said to be extraneous material. Further, in the instant case, it is evident that, the adjudicating authority went in-depth into the entire gamut of the case and upon examination of the records....
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.... STC/Bill No. & date Duty (Rs.) Karan & Co. Invoice No. & date ST-XXVI-A Form No. IPCL Invoice No. & date Discrepancy Noticed 1. 425013 dt. 22.1.01 PRW77 13296 1813/30.1.01 110003326 425013 dt. 22.1.01 A truck cannot come to Parwanoo from Nagothane on the same date 2. 425263 dt. 24.1.01 PRW 79 6648 1906/20.2.01 410003386 425263 dt. 24.1.2000 -do- 3. 6808 dt. 24.2.01 PRW 78 58041 2113/29.3.01 120013847 56345 dt. 24.12.01 -do- Further, it was also revealed during investigation as pointed out by ld. DR, that goods have been found transported by truck covering a distance of over 1400 Kms. in a single day from Nagothane to Parwanoo (details in Annexure-'C'). Details are duly reflected in para 5 of the adjudication order. This is impossibility as no such transportation can take place. All these facts arouse suspicion and needs to be answered. Once impossibility cr....
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....ansaction. Once transaction is doubted due to illegality, it assumes nature of paper transaction without physical movement of goods. The whole transaction becomes nullity and as such no benefit including Cenvat credit becomes available. Similar is situation in its respect of Annexure C' referred in para 9 above. 12. Further Commissioner (Appeals) vide his order dated 29.12.2005 has not at all discussed these issues and has taken a view that provision of Central Excise Law does not require production of ST XXVI-A record. He held that the dealer Karan & Co. had issued modvatable invoices to M/s Swati Storewell Ltd. against all the consignments shown in the aforesaid Annexures, though, these consignments were not covere d by the ST-XXVI-A. Forms as given in Annexure A and C and had not been found entered in the XXVI-B register of Karan & Co. Verification of the records maintained by the Excise & Taxation Department of the Government of Himachal Pradesh at the Parwanoo Barrier also revealed that some of the consignments as detailed in Annexure 'A' have not entered the State of Himachal Pradesh through Parwanoo Check Post/Barrier as evident from the correspondences made with the Sale....