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TaxTMI 
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2023 (5) TMI 602
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.... Rule 26, Central Excise Rules, 2002 for their acts of omission(s) and commission(s). We are not aware of any appeal filed by any of the co-noticees except the appellants herein which we are disposing of by this order. 2. The issue involved herein is whether the learned commissioner is justified in confirming the penalty on the appellants under Rule 26 ibid? 3. The facts leading to the filing of the instant appeal are stated in brief as follows. Through detailed investigation it has come to the knowledge of the Revenue that during the period November, 2006 to November, 2007 M/s. Surabhi Corporation (referred to as "the assessee") had availed Cenvat Credit of Rs.1,67,84,392/- in contravention of various provisions of Cenvat Credit Rules, 2004 by fraud, collusion, suppression of facts and willful misstatement which, according to them is recoverable from the assessee as they had shown utilization of inadmissible Cenvat credit for payment of Central Excise duty without any manufacturing activity and without removing any finished excisable goods. They were passing on ineligible Cenvat credit to their customers without actually supplying any goods with the invoices, so issued by them. ....
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....ve played pivotal role in diverting the polyester yarn, the principal input required in manufacture of Polyester Grey fabric to small weavers and making the invoices available to the assessee in order to enable them to avail ineligible Cenvat credit and therefore they have abetted in the fraudulent availment of input credit by the assessee and therefore the penalty under Rule 26 ibid has rightly been imposed on them. In support of his submissions, learned Authorised Representative placed reliance on the decision of the Tribunal in the matters of Sofiyan Ashraf Rajwani vs. CCE&C, Nashik ; 2017 (135) ELT 559 (Tri.-Mum) and Shri P. Ganesh, Director-Commercial, M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. vs. CCE, Salem; 2022-TIOL-693- CESTAT-MAD. 5. We have heard learned counsel for the appellants and learned authorised representative on behalf of Revenue and perused the case records including the written submissions alongwith case laws placed on record by the respective sides. Since the penalty has been imposed on the appellants under Rule 26 ibid therefore the same is reproduced hereunder:- "Rule 26. Penalty for certain offences. - (1) Any person who acquires possession of....
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....ssee has availed ineligible Cenvat credit. The case in hand is mainly facts based. The case of the department is substantially based on the statements recorded u/s. 14 of Central Excise Act, 1944. In his statements Rajesh Deepak Shah-Proprietor of Surabhi Corporation (Assessee herein) mentioned that he had never purchased polyester yarn for the assessee and never supplied polyester grey fabrics to any party under the name of Surabhi Corporation. He also stated to have started M/s. Shah Fabrics in the name of his father Deepak Shah as per advice of Brijesh Shah. While checking the details of the transporter it has come to notice of the department that the address given on the lorry receipts issued by M/s. Nakoda Roadlines, Malegaon is fake address and it was a vacant godown without there being existence of any roadlines. The invoices accompanied with lorry receipts issued by M/s. Nakoda Roadlines, Malegaon were without any vehicle numbers mentioned on the receipts. Mr. Kurdaram Durgaprasad Kulria-proprietor of M/s. Nakoda Roadlines in his statements u/s. 14 admitted that no grey fabric was transported under those lorry receipts and that he was allured by Brijesh Shah & Rajesh Shah t....
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.... that after receiving the Yarns along with the invoices (meant for the transporters) in the name of M/s Shah Fabrics and M/s Surabhi Corporation, he used to give only invoices to Shri Rajesh Shah and sold the accompanying yarn to other Yarn weavers; that from the Yarn weavers, he used to get crossed cheques in the name of M/s Advance Finstocks Pvt. Ltd., which was a banking company; that he used to deposit these cheques to M/s Advance Finstocks Pvt. Ltd. and in turn, they were issuing cheques in the name of Yarn manufacturing companies, located at different cities; that he used to give photo copies of these cheques to Shri Rajesh Shah; that he did not receive any commission from him. 7. Similarly Mr. Pansari in his statement u/s. 14 ibid (RUD- 26) has stated that that he is in the business of Yarn Broking since last 3 years; that the companies/firms, who want to purchase yarn, place their orders on the Yarn manufacturing company; that the Yarn manufacturing company then informs the broker(s) about their deal and according to the orders, send the yarn to Malegaon through transporters; that after receipt of yarn to Malegaon, the transporter informs the yarn broker about the same, wh....
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....e transporter or the banking company who have named him specifically in their respective statements. The allegations made by the department against appellant Mr. Tibrewal got corroborated from the said statements and more particularly the statement of Shri Dilip Kundanlal Jain, Manager of M/s. Advance Finstocks Pvt. Ltd. (RUD-28) who in his statements u/s. 14 ibid has stated that M/s. Advance Finstocks are a banking company; that they were engaged in the business of taking payable cheques from Malegaon branch (which is submitted by the traders) and providing them the cheques payable at different cities as per their demand, after deducting commission @ 0.050%. On being asked to submit the file of Shri Rajesh Shah, Proprietor of M/s Surabhi Corporation, Shri Jain submitted that the file contains the vouchers of their company, in which description of cheques showing amount of different banks are mentioned; that all the description of cheques mentioned in the vouchers are submitted by Shri Sajjan Tibrewal of Malegaon. 9. So far as the submission of learned counsel about the applicability of the decision of the Larger Bench of the Tribunal in the matter of Steel Tubes of India Ltd.(sup....
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.... has been proved beyond any doubt that the brokers were instrumental in availing of ineligible Cenvat credit by the assessee for payment of central excise duty without manufacturing/ removing any excisable goods and also for passing on the said Cenvat credit to their customers on the basis of the invoices only without supplying any goods to them. This has been established through the ER-1 returns also. Involvement of appellant Sajjan Tibrewal in the fraud has been proved beyond doubt as it has been corroborated by other statements also. He knowingly involved in the fraud as he himself admitted in his statement about his role, retraction of which was much belatedly and was rightly held by the authorities below as afterthought. No doubt there is a complete network in order to defraud the government exchequer. A careful scrutiny of all the statements placed on record, be it the assessee or the transporter or brokers etc. completed the chain of events and proved it beyond any doubt that the appellant Sajjan Tibrewal abetted in making the invoices on the basis of which the assessee has availed ineligible Cenvat Credit without setting up any factory for manufacturing polyester yarn. The ....