TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 331
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....2B and accordingly, requirements of Rule 7(2) of the Cenvat Credit Rules were not fulfilled by the appellant is correct and sustainable in the facts of this case? (4) Whether the order of the Tribunal remitting the case back for further investigation and verification of facts is valid and sustainable when no investigation and verification of facts were undertaken by the Revenue authorities before issuing the show cause notice?" 2. The appellant herein is a textile processor and he has been undertaking dutiable process of grey fabrics supplied by various merchants on job work basis. It delivered consignments of grey fabrics by the waivers with the evidence of payment of excise duties, it was availing Cenvat credit of duties as prescribed under the law. It appears that four alert circulars were issued by the Central Excise Authorities as it realized that some of the weaver manufacturers were fake and credit of duties shown to have been paid on their invoices was not held permissible for the year 2004, as many such weaver manufacturers whose consignment had been received by the present appellant turned out to be fake. The credit of the duty on such invoice since was not pe....
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.... was established that such Unit did not exist or ever existed and the documents purportedly produced were fake since the supplier of the goods itself was non-existent. Thus, according to the Revenue, a bogus document could not be considered as valid document for the purpose of availment of Cenvat credit and, therefore, the credit so availed was incorrectly received and it was intimated to reverse the same along with interest under the intimation to the office of the Superintendent of Central Excise & Customs, Range-II, Division-II, Surat-I. 7. As indicated earlier, the matter went up to the level of the Tribunal and thereafter, it has been remanded for fresh adjudication. If we look at the provision of Rule 7 of the Cenvat Credit Rules, 2002, it would appear that credit can be taken on the basis of a document prescribed thereunder. According to the existing practice, goods which are manufactured may pass through various chains of purchasers before they reach another manufacturer who may use the same as input. In these cases, it is not even in dispute that the original manufacturer who manufactured grey fabrics was actually registered with the Central Excise authority. Such ma....
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....ged one or a manufactured one, it is concocted or a created one in the eye of law and it is in the eye of law a non-existent document. On the other hand, a document issued in the context of a fraud or misrepresentation, is by itself a genuine document and according to settled law, such document is, at the most, voidable and is valid till it is set aside. A transaction that takes place on the basis of such document is good one and can even give a good title to the holder in due course for valuable consideration. At this juncture, we may profitably refer to the observations of the Supreme Court made in the case of CCE v. Decent Dyeing Co., reported in 1990 (45) E.L.T. 201 = (1990) 1 SCC 180 wherein, the Supreme Court held that it would be intolerable if the purchasers were required to ascertain whether excise duty had already been paid as they had no means of knowing it. It was further pointed out that duty of excise is primarily a duty levied on a manufacturer or purchaser in respect of a commodity manufactured or produced. As pointed out by a Division Bench of this Court in the case of Commissioner of Central Excise v. D.P. Singh reported in 2011 (27) E.L.T. 321, the judgment of th....
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....n the documents accompanying the goods, has been paid. The Explanation added to Rule 7(2) even describes the instances which are the reasonable steps. The Appellants in these cases, however, not having taken, those steps, cannot get the benefit of the credit even though he is not party to fraud. In this connection, we fully agree with the views taken in the case of Sheila Dyeing (supra), and hold that the said decision supports the case of the Revenue and taking of all reasonable steps as provided in Rule 7(2) is an essential condition of availing the credit. The distinction sought to be made by Mr. Parikh that the period involved therein related to June, 2003 is not tenable because sub-rule (e) of Rule 7 was introduced even earlier with effect from April 1, 2003. 12. The next question is whether demand of reversal is barred by the period of limitation. In our opinion, in view of our above finding that if the original document is issued even by practising fraud, a holder in due course for valuable consideration unless shown to be a party to a fraud, cannot be proceeded with by taking aid of a larger period of limitation as indicated in Section 11A(1) of the Act. It is now set....