TaxTMI 
TaxTMI 
2022 (12) TMI 1130
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....clared the product as spurious product, not fit for human consumption. It is claimed that had the consignment not been investigated, the exporter would have been successful in exporting the same and would have claimed fraudulent refund of IGST, amount of Rs.19,95,32,076/. It was because of this discovery that search was conducted at the premises of M/s Radiant Traders as per Department and it was found that M/s Radiant Traders is a non existing firm. 3. The Department suspects that all previous export transactions were also fraudulent and similarly spurious goods have been exported and ITC claimed fraudulently. It is on the basis of this premiss that all previous transactions were also of spurious product, that the Department has been able to build a claim of ITC availment of Rs.200 Crores, even though, as per Department's own version, the intercepted consignment could have led to claim of Rs.19,95,32,076/. 4. It is claimed that after the refund of Rs.200 Crores was availed by M/s Harsha International, the said amount was transferred to the bank account of M/s Radiant Traders and therefore, in effect, it is the M/s Radiant Traders, who is running the entire show. 5. It is ....
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.... only for passing on the same ITC fraudulently to its buyer (exporter), who in turn utilized the said ITC for claiming fraudulent refund of IGST and Cess to the tune of Rs.200 Crore. Had the officers not intercepted the export consignments of the applicant's buyer at Mundra port, they would have further availed the fraudulent refund of IGST and Cess amounting to Rs. 19,95,32,076/-. 34. The Input Tax Credit was shown to be received by the applicant on the basis of procurement of Cigarettes, which they have shown to be used as raw material for manufacture of their finished product i.e. Smoking Mixture, which is neither economically viable nor technically feasible and the test report also confirmed that the goods declared as Smoking mixture was spurious goods and not fit for human consumption. It appears that the goods (i.e. inward supplied of Cigarettes) have not been utilized for furtherance of business (i.e. manufacture and supply of Smoking Mixture) but the Input Tax Credit (ITC) to the tune of Rs.218 Crore associated with such inward supplies of Cigarettes was availed by the applicant only for passing on the same ITC fraudulently to its buyer (exporter), who in turn ....
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....in the samples and whether the goods categorised as Tobacco waste? (Emphasis supplied) 14. The chemist after analyzing the sample gave the following opinion on 02.11.2022 on the reverse of the page containing the query: Report - The sample as received is in the form of moist reddish brown fibrous mass. The sample answer test for Nicotine (Tobacco and Tobacco product) having following constants- Loss on drying (% by mass) = 58.6 Ash Content on dry basis (% by mass) =22.8 Acid Insoluble Ash on dry basis (% by mass)= 7.8 Above tested parameter obtained from the sample u/r is not compiles to IS-1578:2018 for Tobacco and Tobacco product: Smoking Mixture - Specification. Query No. 02 & 03 could not be ascertained for want of testing facility. Sealed remnant sample returned herewith. (Emphasis supplied) 15. Sadly, based on this inconclusive opinion of the chemist, the chemical examiner has given his opinion regarding the product not meeting the standard for Tobacco and Tobacco products smoking mixture. But the Department seems to have gone further ahead and assumed the position that Tobacco from cigarettes wa....
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....n) In attempting to establish the truth of a proposition one often casts about for acceptable premisses from which the proposition in question can inferred as conclusion. If one assumes as a premiss for an argument very conclusion it is intended to prove, the fallacy committed is that of petition principii, or begging the question. If the proposition to be established is formulated in exactly the same words both as premiss and as conclusion, the mistake would be so glaring as to deceive no one. Often, however, two formulations can be sufficiently different to obscure the fact that one and the same proposition occurs both as premiss and conclusion. This situation is illustrated by the following argument reported by Whately: "To allow every man unbounded freedom of speech must always be, on the whole, advantageous to the state; for it is highly conducive to the interests of the community that each individual should enjoy a liberty, perfectly unlimited, of expressing his sentiments." It should be noted that the premiss is not logically irrelevant to the truth of the conclusion, for if the premiss is true, the conclusion must be true also since it is the same....
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....Department chose not to send the samples to another lab seeking answers to query no. 2 and 3 when the accused is languishing in Jail, that too, in the clear absence of any opinion on the presence of Nicotine and Tobacco in the product? The benefit of this serious lapse in the investigation has to be given to the accused at this stage. 22. I would now deal with the other argument that is the counsel for the applicant had claimed that in the present matter, no show cause notice has been issued nor any assessment order has been passed and reliance has been placed on the decision in Pawan Goel & Ors VS. Directorate General of GST Intelligence Gurugram, Bail Application No. 458/2021 and Crl. MA No. 2101/2021 decided on 04.06.2021 and Make My Trip Vs. Union of India to this effect. It has been further stated that the offence alleged is compoundable and court must take note of that fact. 23. Ld. Counsel for the Department has submitted that the decision in Make My Trip Vs. Union of India was challenged by the Department in the Hon'ble Supreme Court of India but the challenge did not yield any fruit and he further submits that even though the Division Bench decision has not been dist....
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....taining to Chirag Goel has been filed, which indicates that 4 mobile phones and cash amount of Rs.99.95 Lacs and one DVR was recovered from the residence of Chirag Goel. However, mere seizure of Rs.99 lacs cash from the house of the applicant is not sufficient to conclude that the accused has caused to commit the offence and retained the benefit of above Rs.5 Crores in the present case, which is pre condition to treat the offence as non bailable. 30. Lastly, I may say that, at least, prima facie, from one shipment being intercepted, and the same having failed to pass the test of conforming with standards for smoking mixture, one cannot assume that all previous export transactions were also fake. That would also be begging the question. Needless to say that export transactions are subjected to scrutiny at various levels and even importers seek adherence to agreed specific standards and products are subjected to quality control and checks. What applies to a part in presenti, cannot be ipso facto extended to the whole as also to what may have transpired in the past. 31. Therefore, in view of the discussion hereinabove pertaining to the assumption of the Department regarding non ....