TaxTMI 
TaxTMI 
2019 (1) TMI 1727
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....th Section 11A(4) of Central Excise Act, 1944 (CEA, 1944), interest under Section 11AA of CEA, 1944 and proposing penalty under Rule 15(2) of the CCR, 2004. 2. Brief facts of the case : 2.1 The applicant is engaged in the manufacture of Aluminium Slugs & Circles classifiable and chargeable to duty under Chapter 76 of the Central Excise Tariff Act, 1985. 2.2 Based on an information, the officers of DGGSTI, Regional unit, Vadodara, initiated investigation against M/s. Diamond Power Infrastructure Ltd., Vadodara (hereinafter referred to as "M/s. DPIL"), for availing CENVAT credit on the basis of fraudulent invoices and without actual receipt of goods viz. "Transmission Tower Materials" from (1) M/s. Archon Engicon Ltd., Gandhinagar, and (2) M/s. Accord Industries Ltd. It was noticed that M/s. DPIL was also availing CENVAT credit on Aluminium Wire Rod (referred to as "AWR") on the strength of invoices issued by supplier, M/s. Jindal Aluminium Foils Pvt. Ltd. - a dealer having Central Excise Registration No. AABCJ6867GED002 situated at GIDC, Waghodia (referred to as "M/s. Jindal") without actual receipt of goods namely, "AWR" of various grades which purported to ....
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....cles. He stated that they had made the transaction as trading sales to increase their sale and sold AWR to M/s. DPIL. It was also admitted that the AWR from M/s. DPL, had never come to their factory premises and they had not made any payments for freight to transporters. He also confirmed the carrying capacity of the vehicles as per RTO report is much less than the quantity of goods shown in invoice and hence the same cannot be transported in the vehicle shown in the invoice. (iv) The Booking Registers/Slips along with copy of LR and other documents were maintained by M/s. DKR for transportation of goods done by them on a day to day basis. In respect of supply of goods from M/s. DPIL to M/s. DPL and M/s. DPL to M/s. Pet Metal by M/s. DKR, no such record or entry was found in the Booking Register/Booking Slips of M/s. DKR maintained by them regarding bookings of vehicle for transportation of AWR from (i) M/s. DPIL to M/s. DPL, and (ii) M/s. DPL to M/s. Pet Metal (applicant) for the relevant period. (v) Shri Pratik Joshi, authorized signatory of M/s. DKR in his statements on various dates had accepted and confirmed that they had n....
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....losure by the applicant/co-applicant : 3.1 The applicant/co-applicant in their application submitted that they have accepted the fact that they have taken CENVAT credit amounting to Rs. 4,03,27,593/- wrongly, which has been reversed by them on the same day on further issuance of invoice without movement of goods, so there can be [no] further duty demand in this case nor interest liability. The applicant pleaded for waiver of penalty and prosecution. 3.2 Similar pleadings for waiver of penalty and prosecution were made by the co-applicant. 4. Revenue report : 4.1 Ld. Commissioner, CGST & C. Excise, Vadodara-I vide letter dated 21-5-2018 submitted report on behalf of Revenue along with copy of letter dated 4-5-2018 of Joint Director, DGGSTI, SZU, Surat. 4.2 Revenue submitted that the applicant/co-applicant has concealed certain facts in their application as under : (a) The applicant accepted [the] fact that they have taken Cenvat credit amounting to Rs. 4,03,27,593/- wrongly availed by them. But they have concealed the fact [that] the Cenvat Credit taken by them is based on fraudulent Central Excise invoices and....
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....s imposable on person who has availed Cenvat credit and in this case it is M/s. Pet Metal Pvt. Ltd. (ii) 'Aluminium Wire Rod' is excisable goods and falls within the definition of 'input' as per Rule 2(k) of Cenvat Credit Rules, 2004. (iii) That the inputs (AWR) in question were received at their factory gate and was intended to be used for manufacture but due to cancellation of purchase orders for the final products by the buyers, the applicant had no option to avail Cenvat credit in the books of account and immediately reverse the same by following the provisions of Rule 3(5) of Cenvat Credit Rules, 2004. (iv) As regards allegation in the impugned SCN that the goods were received on fraudulent invoices, the applicant submitted that the said allegation is not acceptable as the applicant did not find any discrepancy in the documents. Regarding fake transport documents, the applicant submitted that the transportation was arranged by the supplier of inputs/goods and the applicant had no control on the transportation documents. (v) That the impugned SCN is alleging availing and utiliz....
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....under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2004. 7. Further Revenue's report : 7.1 The Revenue submitted their further comments on the applicant's submissions vide their letter dated 13-8-2018, wherein they, inter alia, stated as under : (i) The applicant (M/s. Pet Metals Pvt. Ltd.) and the co-applicant (Shri Amit Singla) have taken Cenvat credit on duty purported to be paid on goods AWR based only on fraudulent invoices and fake transport documents issued by M/s. Diamond Project Ltd., a registered dealer. The applicant and co-applicant based on the fraudulent documents had taken Cenvat credit without actual delivery and receipt of any goods. There was no transportation of any excisable goods but to show the movement of goods they obtained and prepared fake lorry receipts of transporting company viz. M/s. D.K. Roadlines, Vadodara. (ii) This is not a case of clandestine removal of goods where assessee failed to discharge duty liability. In fact, there was no movement of conspiring goods. The entire transactions involve fraudulently taking benefit of Cenvat credit, passing on th....
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....an excise duty invoice without delivery of the goods specified therein or abets in making such invoice or any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, they shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater under Rule 26 of the Central Excise Rules, 2002. 8. Applicant's further submissions dated 10-11-2018 : Applicant vide their letter dated 10-11-2018, submitted their comments on the Revenue's report and apart from reiterating their earlier position, they stressed that - (i) The applicant has accepted the amount of Cenvat credit wrongly taken and not Central Excise duty as being claimed by Revenue. (ii) The wrongly availed Cenvat credit is reversed immediately in same month of availment so no interest liability arises. Central Excise duty is payable only if any manufacturing activity had taken place or t....
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....through the applications filed by the applicant and the co-applicant and considered the submissions, both written and oral, made by the applicants as well as Revenue. 10.2 Essentially, the instant case is a case of availment of Cenvat credit and reversal thereof on paper only, without receipt of goods. Though in their application, the applicant has accepted that the credit was availed wrongly as alleged in the SCN, but they have not accepted any amount of the duty demand (as made in the SCN), nor any interest. They contend that the wrong credit was reversed on the same day/month on issuance of invoices, so there is neither any duty nor interest payable. During the hearing, the Ld. Consultant fairly submitted that these are only paper transactions to inflate the business turnover. 10.3 At the outset, the Bench finds that there are pertinent issues of maintainability of the present application. Since the entire case is a case of availment of Cenvat credit on paper without clearance, movement (transportation) and receipt of inputs; and reversal thereof to inflate business turnover (as fairly submitted by the Ld. Consultant during the hearing), the present case does not....
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.... the wrong credit had been taken and reversed. After investigation, Revenue issued the impugned SCN demanding duty of Rs. 4,03,27,593/-. The applicant in its application has held out the pre-SCN reversal of wrong Cenvat credit as acceptance and payment of additional duty for the purpose of settlement, which to our mind is not valid within the ambit of Section 32E ibid. In reality, they have not accepted any additional duty amount nor have paid any amount thereof. They have been contesting the SCN demand as legally invalid, arguing that demand, if any, would be at the final recipient's end. Without expressing any opinion on the legal validity or otherwise of the duty demanded in the said SCN, the Bench finds that the applicant, by contesting the duty demanded in the SCN in entirety and not accepting any of it, does not meet the eligibility criterion of settlement as set out in Section 32E of the CEA, 1944. What the applicant has been seeking in fact is the validation of their action as it existed prior to issuance of the SCN, which to our mind is legally outside the ambit of settlement as provided in law. On merits, they have been challenging the entire duty demand under the SCN. Ev....
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....y seemed to have come to the Settlement Commission to seek the approval of what they have done before initiation of investigation without cognizance of the SCN, i.e. without accepting any additional duty liability demanded therein. The applicant has not accepted or paid any additional duty liability. They have been merely seeking to justify what they have done through the modicum of the settlement application. Clearly, the application in this case is not for settlement, rather for negation of the SCN. If they wish to challenge the SCN on merit, they have to avail other options as available to them under the law. Settlement is not the right mode for it. Thus, the Bench finds that the applicant has not approached the Commission with the clean hands nor made true and full disclosure. Hence the applicant fails on this ground also. 10.8 Further, according to the applicant, they took wrong credit and reversed it, so it squared off and nothing further was due and hence no notice was required to be issued. The applicant is essentially challenging the very raison d'etre of the SCN. Revenue, on the other hand, has reiterated the allegations in the SCN and says that since the applican....