TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 22
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....ce, are liable for confiscation , since the Cenvat Credit in respect of the said goods have been taken without taking reasonable steps to ensure that appropriate Central Excise duty on the said inputs has been paid, as indicated in the documents viz. Central Excise invoices accompanying the inputs. Accordingly, I impose a penalty of Rs. 1,29,51,948/- (Rupees one Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) on M/s. Vipras Castings Ltd. Under Rule 13(1) of the Cenvat Credit Rules, 2002. 3. I order charging of interest at the appropriate rate on the Cenvat Credit amount of Rs. 1,29,51,948/- (Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) fraudulently availed by M/s. Vipras Castings Ltd. Under Section 11AB of the Central Excise Act, 1944. 4. I impose a penalty of Rs. 1,29,51,948/- (Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) on the M/s. Vipras Castings Ltd. Under Section 11AC of the Central Excise Act, 1944 read with Rule 13(2) of the Cenvat Credit Rules, 2002. 5. I also impose a penalty of Rs. 10,00,000/- (Rs. Ten Lakhs Only) on Shri. Ashish H. Goradia, Director, M/s. Vipras ....
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....d issued registered dealer invoices to the appellant, on such invoices appellant has availed Cenvat Credit. During investigation it was also revealed that M/s. SSMIPL against ship breakers duty paid invoices issued multiple set of parallel Cenvat Invoices bearing same serial number simultaneously to various manufacturer and dealers. Due to the above manipulation jurisdictional Central Excise office issued show cause notice No. V/PI/30-29/MDN/01/265 dated 19/1/2004 to M/s. SSMIPL, Mulund proposing the suspension of their Central Excise Registration and in the adjudication registration of M/s. SSMIPL vide Order-in-Original No. 38/2003-04/AC/Mulund dated 25/3/2004 has been suspended. The said order was also upheld by the CESTAT in its order No. A.577& 578/WZB/05/C1 dated 18/5/2005 and the same has attained finality. In further investigation to ascertain whether appellant M/s. VCL has actually received the goods mentioned in invoices issued by M/s. SSMIPL to M/s. VCL, the Department investigated the matter with concerned sale tax check post, verified the vehicle registration number in the invoices with Road Transport Authority and also with ship breakers who were shown as manufacturer ....
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.... through the said check post are maintained date wise in electronic form at the Sales tax Check Post. Scrutiny of the said computerised vehicle movement records revealed that not a single consignment of ship break iron and steel scrap consigned by M/s. SSMIPL had passed through the said check post which indicated that none of the consignment said to have been dispatched by the ship breakers at Alang/Bhavnagar, Gujarat to M/s. SSMIPL as per the Central Excise Invoices were never dispatched to Mulund or Bhiwandi and from further inquiry with all concerned regulatory agencies it was substantiated that not a single consignment purportedly purchased by M/s. SSMIPL has crossed over the border of Gujarat State into state of Maharashtra during period 2001-01, 2001-02, 2002-03, 2003-04. The statement of aforesaid three ship breakers were recorded wherein it was stated that goods cleared by them were plates of various thickness obtained by ship breaking. On further inquiry Shri. Rubal Kapporchand Bansal, Director of Bansal, Director of Bansal Ship Breakers, Bhavnagar in his statement clarified that the plates obtained by ship breaking are not melting scrap and said plates are generally used ....
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....icle to find out whether vehicle shown in the invoices were used for transporting M.S. scrap Alang to Bhivandi on relevant dates. In that inquiry it was revealed by the owner of the vehicle that his vehicle is tractor trailor and used for his agriculture and he was not aware about any M/s. SSMIPL Mumbai. One of the vehicle owner informed that during his ownership his vehicle did not transport any goods to Mumbai. One, Shri Mohsin Abdul A. Bimla, owner of Truck No. GJ 176 T 9751 stated in his statement that said truck was not utilized for transportation of iron and steel scrap and during the said period his truck was flying in the M.P. States. Another Shri P.G. Desai owner of Truck No. GJ 17 X 2151 informed that goods loaded and lifted by him through transport commission agent at Alang were delivered to Indore (not to Mumbai). In further investigation regarding veracity of transport vehicles purportedly utilized as mentioned in the Central Excise invoices issued by M/s SSMIPL, investigating officer on inquiry from various other vehicle owner it was found that the vehicle are oil tanker, garbage transport vehicle, one of the owner has denied that the M.S. Scrap was transported for M/....
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....altogether different. In the statement of Shri. Ashish Goradia, Technical Director of M/s. Vipras Castings Ltd. was recorded on 12/7/2004. He submitted that they have never placed purchase order giving its specific quality requirement to its vendor that the scrap of specific requirement are like CRCA Scrap, turning scrap, heavy scrap graded scrap etc. On being asked whether they have ever placed purchase order for ship breaking scrap, he stated that wherever such orders have been placed and available with them the same shall be submitted. However, subsequently they failed to submit even a single such instance of having placed a purchase order for ship breaking scrap. He also stated that it was not possible for them to check the antecedents of duty paid nature of goods in each and every case where inputs received and invoices are received by the dealer of such inputs and as such there was no safeguard prescribed in respect of duty paid inputs vis-a-vis duty paying documents supporting the same. On being further asked whether iron and steel scrap purchased from M/s. SSMIPL were ship break scrap, Shri Ashish Goradia stated that they only order iron and steel scrap and have never made ....
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....ds from the said premises / units does not arise. It was alleged that since no sale was made to M/s. Simandhar Steel Enterprises by Gujarat based Ship breaking firms, the Cenvat credit passed on such fake invoices is also not admissible to the appellant M/s. VCL. This shows that by availing fraudulent Cenvat Credit M/s. VCL appeared to have carried out its manufacturing activity by consuming Bazar, Commercial Scavenger scrap on which no Cenvat credit was available as it has not suffered any Central Excise duty. From the verification of the vehicle from the RTO, transporter, vehicle owners it was gathered either vehicles are not capable of transporting the goods as it is other than trucks or vehicle has never transported the scrap to the dealer or in some of the cases the vehicle owner are not traceable, that shows that transport vehicle shown in the invoices are also not genuine. Regarding the discrepancies found in transport vehicles, Shri. Goradia, Director of M/s. VCL could not reply satisfactorily he had no cogent explanation in this regard. Thus regarding evidence colleted related to non-transportation of goods the same could not be refuted by the director of VCL which gives s....
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....cause notice alongwith related weighment slips and goods inward cum inspection report for each of the given invoices. Invoices in annexure I and II related to the purchase from M/s. Minion Steels (unregistered broker) who supplied the goods purchased from second stage dealer M/s. SSMIPL during the year 2002-03 and 2003-04 respectively. Respective invoices from second stage dealer M/s. SSMIPL shows M/s. Minion Steels has buyer and the appellant as consignee in the invoices, in annexure III related to purchase from M/s. Manohar Manek Alloys (P) of Second stage dealer who in turn had purchased it from M/s. SSMIPL, the first stage dealer during year 2002-03 and 2003-04. In effect the appellant have purchased the subject goods from M/s. Minion Steels from M/s. Manohar Manek Alloys (P) and received from M/s. SSMIPL on commercial invoices from M/s. Minion Steels and M/s. Manohar Manek Alloys (P) specified that supply was made on free delivery basis; that the appellant have made payment through banking channel and have placed ledger extracted record, the appellant also placed record for that they paid substantial amount of duty through PLA during the relevant period; that without receipt o....
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....vs. CCE, Mumbai - II [2004(176) ELT 496 (Tri-Mum)] (i) Basant Rubber Factory vs. CCE, Mumbai - II [2005(185) ELT 280 (Tri-Mum)] (j) CCE, Mumbai - III vs. Basant Rubber Factory Ltd. [2011 (264) ELT 16 (BOM)] (k) Raj Petroleum Products vs. CCE, Mumbai -1 [2005(185) ELT 280 (Tri-Mum)] (l) Lloyds Metal Engineering Ltd. vs. CCE, Mumbai [2004(175) ELT 132 (Tri-Mum)] (m) Shree Krishna Rolling Mills vs. CCE, Jaipur (2001(129) ELT 722 (Tri-Del)] (n) CCE, Jaipur vs. Ashok Leyland Ltd. [2001 (127) ELT 804 (Tri. Del)] (o) Century Laminating vs. CCE, Meerut [2001(127) ELT 268 (Tri-Del)] (p) SRF Ltd. vs. CCE, Indore [2000(124) ELT 448 (Tri)] (q) Shabana Steels Pvt. Ltd. vs. CCE, Rajkot [2004 (177) ELT 332 (Tri.Del)] (r) Uni Deritend Ltd. vs. CCE, Nagpur [2011 (272) ELT 280 (Tri Mum)] In the rejoinder to the submission, Ld. Counsel placed heavy reliance on case of M/s. Bhagwati Steelcast Ltd. vs. CCE, Nashik reported in [2012(293) ELT 417 (Tri-Mumbai) appellant submits that the said decision does not help Revenue's case for the following reasons: (i) In the Bhagawati Sttelcast Ltd. stated that invoices did not accompany goods but were delivered separately indicting thereby that on....
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....ansport documents or any corroborative evidence in the form of Material Inward Register. Also there was admission by the General Manager of the assessee corroborated by its Director about the alleged irregularity therefore in the present case extended period is not invokable and demand is timebar. It was further submitted that the impugned order has imposed penalty on the appellant under Section 11AC of the Central Excise Act, read with Rule 13 of the Cenvat Credit Rules, 2002 besides a separate penalty of equal amount under Rule 13(1) of CCR, 2002. In effect for the demand of Cenvat Credit of Rs. 1,29,51,948/- the impugned order has imposed double the amount of it (2xRs. 1,29,51,948/-) as penalty; that the appellant has taken reasonable steps as contemplated in explanation to Rule 7(2) of the Cenvat Credit Rules, 2002. There is no doubt about the identity and address of M/s. SSMIPL issuing the invoices on the basis of which the appellant availed Cenvat Credit. Therefore appellant submits that the penalty under rule 13(1) is not attracted in the present case. It was further submitted that penalty under Section Rule 13(1) as distinct from penalty under Section 11AC in reference to R....
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....per transaction and issued Cenvat Credit invoices without actually dealing in material. This is confirmed from the following aspects:- (i) On verification of RG-23 D register of the dealer, it was found that the duty debit entry no. and page no. particulars as per the RG-23 D register were altogether different from the duty debit entry no. and page no. as indicated on the Central Excise invoices issued by the said dealer on which Cenvat Credit has been availed by the appellant which proves that the invoices of M/s. SSMIPL on which the appellant has taken Cenvat Credit are bogus. (b) The said dealer has not received the goods against which he issued the Cenvat Credit invoices. It is amply proved from the following: (i) The Sales Tax Authority have reported by their letter dated 12.2.2004, 25/5/2004 and 12/1/2005 that not a single transaction of vehicles movement carrying iron and steel scrap pertaining to M/s. SSMIPL has been recorded in any of the check post of the Gujarat State entering Maharashtra during the said period. (ii) The transporters have confirmed in their statement that they have never transported any such goods either to the dealer or the appellant. (iii) The veh....
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....at Credit on inputs or capital goods shall take reasonable steps to ensure that the inputs on capital goods on which he has taken credit are the goods on which appropriate duty of excise has been paid. In the present case, the appellant could not produce any document to prove that the goods on which they have taken the Cenvat Credit have been received by them in their factory. They could not produce even a single Lorry Receipt or proof of payment of transportation charges which clearly proves that they have failed to discharge the burden of proof as contemplated in the Cenvat Credit Rules. (g) Regarding denial of Cenvat credit in respect of Central Excise Invoices issued by Second stage dealer M/s. Manohar Manek Alloys Pvt. Ltd. this is to submit that the said Second stage dealer has shown to have purchased, these goods from M/s. SSMIPL, the first stage dealer and who in turn supplied only invoices without any goods. It become amply clear that when the first stage dealer M/s. SSMIPL have not purchased/received any goods against the invoices issued by them to the second stage dealer M/s. Manohar Manek Alloys Pvt. Ltd. who have also supplied only the invoices without any goods. Sinc....
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....Cenvat Credit was passed on the basis of such fake invoices. Accordingly, it was unearthed that M/s. SSMIPL have fraudulently passed on Cenvat Credit to the tune of Rs. 10,62,90,504/- to various manufacturers including the present appellant M/s. Vipras Casting Ltd. In view of the detailed investigation and after issuance of show cause notice bearing No.V-PI/20-29/MDN/01/265 dated 19/1/2004 to M/s. SSMIPL proposing suspension of Central Excise dealer registration on the allegation that the M/s. SSMIPL issuing the fake invoices and fraudulently passing on the Cenvat credit to the various manufacturers. The said show cause notice has been adjudicated under order in original No. 38/2012-04/AC/Mulund dated 25/3/2004 wherein suspension of dealer ship registration of M/s. SSMIPL, Mulund has been confirmed. M/s. SSMIPL moved appeal before CESTAT, CESTAT vide order No. A/577 & 578/WZB/05/C-I dated 18/5/2005 upholding order-in-original rejected the appeal, accordingly the same has attained finality. Consequently another show cause notice F. No. V-PI/12-7/Gr. D/7/2003/PT.VI/3013 dated 31/3/2006 was issued to M/s. SSMIPL for revocation of its Central Excise dealership registration for issuance....
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.... by M/s. SSMIPL to M/s. VCL are not matching with inward invoices and it was found as parallel invoices this itself shows that invoices issued by the M/s. SSMIPL to M/s. VCL are nothing but bogus invoices and these invoices were not issued against duty paid invoices. Further investigation clearly revealed that sale tax authority under their official report informed that not a single transaction of vehicle movement carrying iron and steel scrap consigned to M/s. SSMIPL has been recorded and there is no record of sales tax payment in the check post of the Gujarat state entering into Maharashtra during the entire period from 2000-01, 2001-02, 2002-03 and 2003-04. We find that it is impossible that interstate sales transaction can be made without recording transaction at the check post between two states and without payment of sales tax. We also find that the appellant could not give any explanation on the report submitted by ale tax authority therefore same attained finality and this report clearly shows that no transaction has been taken place from Gujarat to Maharashtra therefore subsequent passing of Cenvat credit of transaction which has never taken place is out of question. In th....
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....d the Gujarat border into Maharashtra. Investigation also revealed that in the statement, the Director of the appellant company, Shri. Ashish Goradia could not give any plausible explanation regarding the mismatch of the transport detail. He only stated that they normally purchase the scrap on free delivery basis and it is not possible to recollect under which vehicle they have received the scrap. We are of the view that once the concerned Government authority i.e RTO has given report wherein it was found that vehicle number mentioned on the invoices are not capable of being transporting the goods in question, purchaser if could not give any contrary evidence or he did not discard the evidence provided by RTO with appropriate counter evidences the RTO report has to be taken as correct and the lower authority has rightly used as evidence to hold that there was no transportation of the inputs either from Gujarat to dealer M/s. SSMIPL nor from said dealer to the appellant. It was found that despite all the opportunity given to the director of the appellant by way of recording the statement he could not give a single contrary material/evidence to demolish the evidences gathered by the ....
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....the appellant that they have taken reasonable steps inasmuch as they received the scrap alongwith the invoices and no discrepancy was found in the invoices therefore no reason to doubt the transaction and invoices issued, we observed above that invoices were issued in respect of ship breaking scrap which is not melting scrap however they received melting scrap therefore it is apparent from the invoices itself that the invoices were made for ship breaking scrap and the material which was said to have been received by the appellant is not ship breaking scrap. In this case appellant should have pointed out to the dealer that material shown in the invoices are not the same which was supplied physically. It is not convincing that the documents issued for a particular items and material received is some different item and still appellant maintained that they have taken reasonable steps. The conduct of the appellant clearly shows that they are in collusion with dealer for availment of the fraudulent Cenvat Credit. As per teh Cenvat Credit Rules, assessee cannot be permitted to avail the Cenvat Credit of a item covered under duty paying document which he has not received but received some ....
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....d that there are ample of evidences such as non transportation of the goods, confirmation of sales tax authority that the goods have not been transported from Gujarat to Maharashtra and no sales tax have been paid, ship breaking firms were also not in operation during the period. RTO's confirmation regarding different nature of vehicle which are not capable of transporting the goods and various statement of transporter and vehicle owners denying the transportation of the inputs to conclusively proved that goods have neither been transported form ship breaking firm to M/s. SSMIPL nor from M/s. SSMIPL to the appellant. It is also proof from the investigation that ship breaking scrap shown in the invoices have not been received by the appellant as the same was not being used in the process of manufacture being not melting scrap. In view of these evidences merely because the appellant have maintained GRN, gate register, material inward register this cannot disprove other evidences and charges made thereupon. All these GRNs, gate register, material inward register are the documents of appellant is free to do the same and such documents can be maintained with or without receipt of th....
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....ial inward register, gate register etc. whereas in the present case these records are regularly maintained by the appellant. As we have already observed that there are various evidences where from it is established that entire modus operandi was under serious fraud and we also found that merely maintenance of these records it does not disprove other evidences therefore only on the basis of these records it cannot be said that appellant have not indulged into fraud, collusion, suppression of facts etc. The appellant knowingly that they were not receiving the goods covered under the invoices i.e. ship breaking scrap availed the Cenvat credit, this clearly shows that appellant is the main person who is the part of this modus operandi of fraud therefore judgment of Bhagwati Steelcast Ltd case is not of any help of the appellant regarding the issue of time bar. It is also fact that if any genuineness in the whole transaction is there, the Director of M/s. SSMIPL would have presented himself before the investigation agency however right from the initiation of the investigation the person of M/s. SSMIPL got absconded despite court's notices and never made any presence before the inves....