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2015 (10) TMI 1567

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....d alert circular it was noticed that some of those allegedly bogus parties had issued invoices in the name of appellants (M/s. Accelerate Synthetics Pvt. Ltd) and therefore investigations started against the appellants. As a part of investigations a number of statements of the Proprietor and employees of the appellant were recorded. Statements of number of yarn suppliers and brokers were also recorded. Certain evidences in shape of money trail and allegedly fictitious transportation records were also obtained. On the basis of these evidences it was alleged that: i) They have taken credit on fake/ bogus invoices on which duty has not been paid ii) They have taken the credit without receipt of goods iii) They have not taken steps to verify the genuineness of the suppliers of goods as required under Cenvat Credit Rules iv) They have issued fictitious invoices of final products in order to justify taking of credit v) They have filed incorrect return wrongfully depicting receipt of inputs 3. One of the alleged suppliers of fake invoices to the appellant is M/s.Shiv Trading Company. It will be pertinent to mention here that in a case decided by this Tribunal in the case of Sh....

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.... alleged supplier in the invoices from whom the appellant allegedly purchased, no enquiry appears to have been done. Further, it is seen that the appellant is situated in Mumbai, whereas the invoices recovered from M/s Accelerated Synthetics Pvt. Ltd. allegedly issued by the appellant are printed by one Ambaji Stationery, Surat. No enquiry has been made with the printer as to who got the stationery printed. Further, the appellant had stated that he had obtained the registration under Central Excise on being inspired by one Chandubhai Patel of Surat, who has also admitted in his statement before the Revenue authorities that he had also registered one firm at Surat with the Excise Department in similar name of Shiv Trading Company. The said Chandubhai Patel has been found to be involved in the issue of bogus CENVAT invoices in other names also. It appears that the said Chandubhai Patel has been instrumental in the mischief by using the name of the appellant without his knowledge. Moreover, it is found that the adjudicating authority has imposed penalty without any categorical finding against the appellant. Rather the penalty is imposed on the basis of assumption and presumption whi....

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....djudicated in a different proceeding the same cannot be done again in the present proceedings. 8. The learned AR argued that the receipt of goods has been disputed in the present case and hence the facts of the present case are substantially different from the facts before the Honble High Court of Gujarat in case of Prayagraj dying and printing mills. Moreover in the instant case there are specific allegations of involvement against the appellants. He also argued that the manager of the appellants has admitted that they were involved in paper transactions and no goods were received. He argued that the manager of the appellant had also admitted to receiving the money back in cash against the cheque issued to brokers for suppliers of yarn. 9. It is apparent that the principle of natural justice has not been followed in so much as no final hearing has been given and cross-examination has been denied without assigning any reasons. However it is seen that in the case of Prayagraj dying and printing mills, Hon'ble High Court of Gujarat had observed that since in that case there was no allegation of mensrea on the part of the appellants in that case, the Tribunal was wrong in remanding....

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....even though he is not party to fraud. In his connection, we fully agree with the views taken in the case of Sheila Dying (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, 2013. 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 practicing 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 settled law that Section 11A (1) is applicable when there is positive evasion of duty and mere failure to pay duty does not render larger period applicable. In the case before us, it is not the case of the Revenue that the transferees were party to any fraud and theref....

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....s. In the case of Asha Traders the receipt of goods was challenged. Therefore, the learned Counsel argued that in the case before the Hon'ble High Court there was also a case where receipt of goods was challenged. It is seen that the Hon'ble High Court has given decision based on presumption that the appellants in that case had received the goods along with the invoices, and therefore were not aware that the invoices were fake or bogus. The findings of the Hon'ble High Court are based on lack of mensrea on the part of the appellants in that case. In the instant case there are direct allegations against the appellants and therefore, their involvement cannot be ruled out. In the circumstances the benefit of the aforesaid decision of the Hon'ble High Court cannot be extended to the appellants. 13. The appellants had given detailed reasons for seeking cross-examination of witnesses. It is seen that the cross-examination has been denied solely on the grounds that there is hard evidence which is corroborated by the statements and therefore no cross-examination is necessary. It is observed that this is not sufficient ground for denying cross-examination of witnesses whose statements have....