TaxTMI 
TaxTMI 
TaxTMI 
2014 (8) TMI 19
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....the Central Excise Rules, 2002 (hereinafter referred to as "Rules, 2002"). 2. Facts leading to the present Special Civil Application in nutshell are as under: 2.1 That the petitioner who was exporter cum manufacturer filed rebate claims of Rs. 3,51,469/+ Rs. 1,98,432/for the goods i.e. MMF(P) exported by them on payment of central excise duty, exported under different invoices and by submitting the ARE1 etc. 2.2 While scrutinizing the said rebate claim and on the basis of the documents filed by the petitioner and on verification of duty payment it was found by the department that the petitioner has purchased the exported goods from M/s. Raju Synthetics Pvt. Ltd. (now M/s. Hans Dyeing & Printing Pvt. Ltd.), Surat. On further inquiry it was found by the Department that the entire transactions were fake and as such they were only billing transactions only with a view to get the CENVAT credit as well as the rebate and therefore, the petitioner was served with the show-cause notices dated 02.02.2006 by which the petitioner was called upon to show-cause as to why the rebate claim of Rs. 3,51,469/+ Rs. 1,98,432/filed against ARE1 mentioned in the table should not be rejected under Rule....
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....n physical verification it is found that the Unit is bogus/fake" by way of endorsement on letter F.No.R.V/Export/Raju/200405, dt. 22.03.2005." In response to the said show-cause notices, the petitioner submitted the reply dated 14.06.2006 by submitting that as such the goods have been physically exported out of India and that the petitioner has paid the amount of duty and proper documents for claiming the rebate claims are also filed. It was submitted that therefore the petitioner is entitled to the rebate of duty on the goods actually and physically exported. 2.3 That the Assistant Commissioner of Central Excise and Customs, Surat adjudicated the said show-cause notice and passed the OIO on 28.03.2007 rejecting the rebate claim submitted by the petitioner by observing that there were only paper transactions between M/s. Raju Synthetics Pvt. Ltd. and the petitioner and the same was only billing activities for getting the benefit of CENVAT Credits as well as the rebate. 2.4 That feeling aggrieved and dissatisfied with the Order in Original passed by the Assistant Commissioner, Central Excise, Surat rejecting the rebate claim of Rs.Rs.3,51,469/+ Rs. 1,98,432/filed by the petitione....
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....ch the duty was paid by the petitioner. 3.2 It is further submitted by Shri Dave, learned advocate appearing on behalf of the petitioner that as such the petitioner purchased the goods/processed fabrics from one M/s. Raju Synthetics Pvt. Ltd. It is submitted that as such the said M/s. Raju Synthetics Pvt. Ltd. purchased the goods from M/s. Rangroop Texturiser, M/s. Om Textiles and M/s. Shree Ganesh Textiles. It is submitted that as such M/s. Raju Synthetics Pvt. Ltd. from whom the petitioner purchased the processed fabrics/goods, which came to be exported by the petitioner was at no point of time declared as a fake company. It is submitted that therefore and in such a situation denial of the rebate claim is not justified, which deserves to be quashed and set aside. 3.3 It is further submitted by Shri Dave, learned advocate appearing on behalf of the petitioner that as such the petitioner purchased the inputs/goods from M/s. Raju Synthetics Pvt. Ltd. which was not found to be nonexistent and thereafter actually and physically exported the goods on payment of duty and therefore, the petitioner shall be entitled to the rebate of duty paid on the goods which came to be exported by th....
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.... that the transactions between M/s. Raju Synthetics Pvt. Ltd. (Supplier) and the petitioner were sham being mere paper transactions and it was only billing activities, the petitioner is rightly denied the rebate claim. 4.1 Now, so far as the reliance placed upon the decision of the Division Bench of this Court in the case of D.P. Singh (Supra) by the learned advocate appearing on behalf of the petitioner in support of his submission that as the petitioner had purchased the goods/raw material / inputs from M/s. Raju Synthetics Pvt. Ltd. and M/s. Raju Synthetics Pvt. Ltd. was not declared fake supplier and as M/s. Raju Synthetics Pvt. Ltd. purchased the said goods from M/s. Rangroop Texturiser, M/s. Om Textiles and M/s. Shree Ganesh Textiles and therefore, the petitioner can be said to be bonafide purchaser who actually and physically exported the goods on payment of duty is concerned, it is submitted that as such the said decision shall not be applicable to the facts of the case on hand. It is submitted that in the present case even there are concurrent findings of fact by all the authorities below that infact the transaction between the petitioner and M/s. Raju Synthetics Pvt. Ltd....
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....e petitioner exported the goods by using the inputs purchased by him on payment of duty or excise duty and the petitioner used the said inputs on which the duty was paid then and then only the petitioner shall be entitled to the rebate. In the present case, as observed herein above, it has been found and established that the transactions between the M/s. Raju Synthetics Pvt. Ltd. and M/s. Rangroop Texturiser, M/s. Om Textiles and M/s. Shree Ganesh Textiles and thereafter between M/s. Raju Synthetics Pvt. Ltd. (supplier) and the petitioner were fake transactions, no evidence has been produced to establish and prove the actual physical movement of the goods from M/s. Om Textiles, M/s. Ganesh Textiles to M/s. Raju Synthetics Pvt. Ltd. and thereafter from M/s. Raju Synthetics Pvt. Ltd. to the petitioner. Considering the aforesaid facts and circumstances, the adjudicating authority denied the rebate claim. On appeal, the Commissioner (Appeals) has dismissed the said appeal preferred by the petitioner by observing in paras 4.1 to 4.4 as under: "4.1 In a normal situation, claim of rebate is granted based on the copies of ARE1 and export invoices evidencing clearance of export goods on pa....
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.... the rebate sanctioning authority was duty bound to carry out through scrutiny of the claim of rebate including the transactions right from the procurement of grey fabrics by the processor. It is legal duty of the rebate sanctioning authority to satisfy himself that transactions recorded in the documents genuine, that goods reflected in documents indeed exported and that the duty was indeed paid to the exchequer. Under facts and circumstances, the verification of input invoices is very relevant to ascertain the genuineness of the claim and also the fact of payment of duty. 4.2 It is found that all the suppliers are fake, bogus/nonexistent/ fictitious and declared as such under the Alert Circulars issued by the Commissioner of Central Excise, Surat-I. The Alert Circulars are in public domain. None of the purported suppliers of grey fabrics have represented against the circular. The verification report of respective Range Officer also confirms nonexistence of purported supplier. 4.3 The appellant (a Merchant Exporter) has produced copies of purchase order placed on the processor (manufacturer). From the purchase orders it is seen that the value of the processed fabrics has been sho....
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....ee purported suppliers. Argument of the appellant is that the processor has debited the credit account and therefore they (appellant) should be allowed the rebate of duty reflected on the clearance documents. (ARE1 and export excise invoice). However the allegations are that the processor has availed credit to the tune of Rs. 51,84,530/on basis of invoices of grey fabrics raised by fictitious supplier. No doubt the processor has shown remorse by making debit of a part of the wrong credit but that alone is not sufficient to entitle the appellant to claim rebate. First of all payment is only for one third of wrong credit. Secondly it establishes that appellant and the manufacturer are engaged in the fraudulent documentation." Aforesaid findings and the order passed by the Commissioner (Appeals) has been confirmed by the Revisional Authority. Under the circumstances, when the transactions between the manufacturer (processor) and the merchant exporter (petitioner) are found to be bogus and when it has been established that the purported suppliers are fake and fictitious persons and the entire transaction is found to be only billing activities for the purpose of taking undue advantage....