TaxTMI 
TaxTMI 
2022 (5) TMI 1242
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....export the fabrics under claim of rebate in terms of Rule 18 of Central Excise Rule 2002; in terms of Rule 12B introduce with effect from 25.03.2003 the appellants have obtained provisional registration as warehouse; the said Rule 12B has been rescinded on 09.07.2004; the appellants continued to avails CENVAT Credit. Department contested the CENVAT Credit avails by the appellant during the period 09.07.2004 to 30.06.2005 alleging that the appellant had no facility to manufacture the dyed and printed fabrics and hence they are not the manufacturers and accordingly, CENVAT Credit is not admissible; that the credit was fraudulently availed; a show cause notice dated 09.08.2005 and an addendum dated 17.09.2007 was issued to the appellants proposed into deny the CENVAT Credit of Rs. 2,88,89,873/- and to recover credit amount into 2,77,00,617/-; the show cause notice also proposed penalties on the appellants and other noticees. Learned commissioner vide the impugned order dated 31.03.2009 denied the entire credit of Rs. 2,88,89,873/- avail by the appellants; confirmed the demand of an amount of Rs. 2,77,00,617/- utilized by the appellants, along with applicable interest; imposed penalty ....
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....Bansal 2004 (177) ELT 927 (Tri-Mumbai). 3. Learned counsel submits that the accepted facts of the case are that most of inputs were duty paid; the same were received in their factory and sent to job workers in terms of Rule 4(5)(a) of CEVAT Credit Rule of 2004; final product was actually exported on payment of duty under claim of rebate, after verification and inspection by jurisdictional officers; once duty payment is not disputed CENVAT Credit cannot be denied as held by R.S. India v. CCE -2003 (153) ELT 114 (T) (affirmed by the Delhi High Court in CCE v. R.S. Industries 2008 (228) ELT 347 (Del) and CCE v. SPIC Pharmaceuticals Division 2006 (199) ELT 686 (T-Chennai); registration or otherwise under Rule 12B cannot be a basis for availing credit as held in CCE v. Shilpi Prints - 2004 (170) ELT 63 (Tri Mum), CCE vs. PRS Permacel Pvt. Ltd. Reported in - 2018 (363) ELT 1199, and Bericap India Pvt. Ltd. Vs. CCE -2018 (363) ELT 1078 4. Learned counsel submits that the appellants are engaged in cutting and packing of finish fabrics in their perusals; when the input stage rebate his claimed, it is not necessary that the finished goods should be chargeable; rebate of duty paid on in....
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....conclude that no fabrics were send and only invoices were prepared is wrong; the adjudicating authority has not accorded permission for cross examination of Shri Imtiyaz; the appellants never interacted with Shri Imtiyaz Godil; payments for the fabrics were made in cheques; if Mr. Imthaz was to be believed there was no need for them to make payment of 100 percent value of the invoice; as Shri Imtiyaz was not subjected to cross examination his statement cannot be relied upon as held in CCE v. Kamal Singhania & Others Judgment dated 17.09.2021 Bombay High Court; learned counsel further submits that the credit availed by them is correct as per the provisions of Rule 3(1) Rule 4(1) of CENVAT Credit Rule 2004 as the goods for received in the factory and were used in the manufacture of export goods; the appellants have taken reasonable steps in terms of Rule 9(3) of CENVAT Credit Rules which require the appellants to be satisfied about the identity and address of the manufacturer; other than this there are no other guidelines as to the reasonable steps the appellant is required to be taken by the appellants; the appellants have informed the department enclosed in the list of manufacturer....
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.... capacity; the provision of this rule cannot be read to mean that the appellants are required to ensure that the input in respect of which payment of duty of Excise is indicated has been paid. He relies on R.S. Industries Vs. CCE New Delhi - 2003 (153) ELT 114 (Tri-Del) and CCE, Pondicherry Vs. SPIC Pharmaceuticals Division 2006 (199) ELT 686 (Tri-Chennai). Learned counsel submits that out of total demand of Rs. 1,21,61,218/-, the appellants have justified the credit of Rs. 80,16,022/- and submits that Rs. 36,89,486/- has already been reversed; therefore, only Rs. 4,70,710/- request to be paid in case the Tribunal holds that the credit is inadmissible. Learned counsel submits that in view of the above as there is no mala fide intention on the part of the appellant and as no commissions and omissions were on their part no penalty is imposed; he submits that rebate claim before by the appellants for an amount of Rs. 1,39,00,976/- and the same is pending with the authorities in view of the current show cause notice issued. 9. Shri Nathjee Textiles, the appellants in E/852/2009, submit that learned commissioner passed the order in a summary fashion without appreciating the facts of ....
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....r supplied any yarn to M/s. Sunrise and all transactions were on paper only; Shri Bimal Jokhani admitted the fraudulent availment and paid Rs. 16,48,434, in respect of M/s. Sunrise Textiles and deposed that part of the payment due to Sunrise were withheld for this reason only;. Further, in another SCN dtd. 17/9/2007, it was alleged that M/s. Sunrise issued invoices prior to registration; the appellants being co-noticee to the Show Cause notice are aware of fraudulent acts by M/s. Sunrise. (ii). Fast wave Trading: Shri Santosh Kumar H. Gupta, Director could not trace out the job worker of his company; Shri Bimal Joukani admitted the bogus nature of credit passed and paid/reversed Rs. 12,56,730. (iii). Sajjan Textiles Bhiwandi and Shreeman Textiles, Bhiwandi: These units were not having any manufacturing facility; they were only issuing invoices facilitating the manufacturers to avail Cenvat credit on bogus invoices; Alert circular dated 19/6/2006 was issued by Thane I; Tribunal in the case of Weizmann Ltd. and Others 2016-TIOL-505-CESTAT-MUM confirmed that both the above units viz. Sajjan Textiles and Shreeman textiles did not manufacture any grey fabrics and the transactions ....
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....s only stated the position on record; this letter is rather supporting the stand of the Revenue; when the premises of the Appellants were visited by the officers, it was found that the Appellants M/s. Venus International were not carrying any actual manufacturing activities; the SCN alleges on factual verification, the Appellants were found to be 'not manufacturers'; the letter was an internal correspondence and cannot be considered as evidence. 13. Learned Authorized Representative submits also that the addendum dated 17.09.2007 issued on the basis of further investigation, proved that the appellants availed fraudulent Cenvat credit; the issue in the show cause notice and addendum was same i.e. disallowance of Cenvat credit; No additional demand has been issued by addendum; investigation proved that the appellant continued to work in the status/capacity of manufacturer under erstwhile Rule 12B only with an intention to avail fraudulent Cenvat credit and to claim fraudulent rebate; As fraud was involved in the matter, the show cause notice correctly invoked proviso to Section 11; the addendum also was issued well within the time of 5 years. He relies upon: (i) U....
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....ilpi Prints (supra) and contend that the activities undertaken by them are incidental and ancillary to the completion of manufacturing process. 17. The appellants also contend that Revenue did not dispute the receipt of raw materials/inputs and therefore, in view of RS India (supra), credit cannot be denied; Registration cannot be a determinant factor for applicability of rebate as held in Shilpi Prints (supra); they also contend that in respect of rebate, the concept of manufacturer is wider and cannot be restricted to the definition under Section 2(f) of Central Excise Act, 1944; they also rely upon the Board Circular No. 129/40/95-CX dated 29.5.1995 which states that the definition of 'manufacture' for the purposes of grant of input stage rebate has also been made liberal to include the process of blending, alterations or any other operations thereon; therefore, the appellants contend that the show-cause notice is issued contrary to the clarifications given by CBEC. 18. We find that the issue of applicability of CENVAT Credit to the appellants is no longer res integra. Tribunal vide various decision has settled the issue in favour of the appellants. We find t....
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....that case this Tribunal has held that the assessee was not entitled to modvat credit as they have not undertaken any manufacturing activity nor did have any manufacturing premises but facts remains that they had paid duty on final products in which the input was used and quantum of duty paid on the final products is not less than the credit taken on the inputs. The whole exercise therefore becomes revenue neutral and therefore, no purpose will be served by demanding duty. Moreover as per the invoice shown by the learned Advocate for the appellant at page 35 of the appeal memo, which clearly shows that if the goods were directly sent to the job worker than the credit is available to the job work as the name of the job worker clearly entered in the invoice. Accordingly, the arguments advanced by the learned Advocate for the appellant have forced that it is a case of revenue neutral situation. Hence, I do not find any merit in the impugned order same is set aside, appeal is allowed with consequential relief if any." 19. We further find that availment of CENVAT credit was held to be correct on the principle of revenue neutrality by Tribunal in the case of CCE, Pune vs. Keetex : 2008....
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....within 14 days (3/8/2004 to 18/8/2004) when their monthly manufacturing capacity was only 16800 L. Mtr; Imtiyaz Godil Authorized Signatory of Sunrise Textiles on 31/3/2005 stated that they did not manufacture any grey fabrics etc; no yarn was purchased and no fabrics manufactured on job work; he passed on credit fraudulently, for a commission of Rs. 1 to 1/50 per kg of yarn; supplies shown were fraudulent; Shri Mahesh Patel, proprietor of M/s. Shree Asha Traders admitted that he never supplied any yarn to M/s. Sunrise and all transactions were on paper only; Shri Bimal Jokhani admitted the fraudulent availment and paid Rs. 16,48,434, in respect of M/s. Sunrise Textiles and deposed that part of the payment due to Sunrise were withheld for this reason only;. Further, in another SCN dtd. 17/9/2007, it was alleged that M/s. Sunrise issued invoices prior to registration; the appellants being co-noticee to the Show Cause notice are aware of fraudulent acts by M/s. Sunrise. (ii). Fast wave Trading: Shri Santosh Kumar H. Gupta, Director could not trace out the job worker of his company; Shri Bimal Joukani admitted the bogus nature of credit passed and paid/reversed Rs. 12,56,730. (ii....
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....M/s. Fast Weave Co. Pvt. Ltd., Sajjan Textiles and Shreeman Textiles; out of total demand of Rs. 1,21,61,218/-, the appellants have justified the retention of credit of Rs. 80,16,022/- and Rs. 36,89,486/- and therefore, if at all they are held to pay the CENVAT credit availed by them, they are liable to pay only Rs. 4,70,710/-. 24. We find that Rule 9(3) of CENVAT Credit Rules casts certain responsibility on the manufacturers who avail CENVAT credit. It would be beneficial to have a look at the relevant provisions: Rule 9(3) of the Cenvat Credit Rules: The manufacturer or producer of excisable goods or provider of output service taking CENVAT credit on input or capital goods or input service, or the input service distributor distributing CENVAT credit on input service shall take all reasonable steps to ensure that the input or capital goods or input service in respect of which he has taken the CENVAT credit are goods or services on which the appropriate duty of excise or service tax as indicated in the documents accompanying the goods or relating to input service, has been paid. Explanation - The manufacturer or producer of excisable goods or provider of out....
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....not tenable and therefore, the case laws relied upon by them are not applicable as the facts are different. CENVAT credit is a huge facility given to the manufacturers. The manufacturers are duty bound to adhere to the conditions stipulated under CENVAT Credit Rules. It was incumbent upon the appellants to satisfy themselves about the name, address and existence of the suppliers. We find that even going by the appellants own contentions, some of the suppliers are not traceable. It would be very naïve to believe that the appellants are not concerned with the whereabouts of their suppliers. The fact that in most of the cases, cheques were encashed by third parties unconcerned with the suppliers, supports the contention of the department. Therefore, we find that the appellants have engaged themselves in a fraudulent activity inasmuch as availing credit on the basis of bogus invoices and again claiming the same as rebate on the exported goods. Fraud committed vitiates every activity of the appellants. We find that this Bench vide Final Order No. A/3314-3329/15/EB dated 16.7.2015 have dealt a similar issue and have upheld the demand of credit availed fraudulently on the basis of bo....