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2006 (12) TMI 407 - AT - Central Excise
Issues:
Appeal against Commissioner (Appeals) order confirming reversal of Cenvat credit but reducing penalty. Analysis: The case involved M/s. Shiv Enterprises, a dealer of dutiable excisable goods, wrongly availing Cenvat credit based on invoices from M/s. Ankit Textiles, a manufacturer with fake address. The original authority ordered M/s. Shiv Enterprises to pay back the credit along with interest and imposed a penalty, which was reduced by the Commissioner (Appeals). The appellant argued they purchased from a registered manufacturer, paid by cheque, and passed on the credit. However, the Tribunal found M/s. Ankit Textiles' address and proprietor's address fictitious, indicating fraud. The Tribunal held that the dealer was not entitled to the credit due to fraud, emphasizing the need for reasonable precautions under Rule 7. Recovery of wrongly availed credit was directed from the manufacturer/producer, not the dealer, as per Rule 12. The Tribunal concluded that M/s. Shiv Enterprises had no right to pass on the credit, and the penalty imposed was justified. The Tribunal noted that M/s. Ankit Textiles engaged in fraud, rendering their invoices invalid for credit purposes. As the dealer had no entitlement to the credit, the invoices issued by them were also deemed invalid for subsequent buyers. The Tribunal directed the department to recover the credit from the manufacturer/producer who availed it based on M/s. Shiv Enterprises' invoices. Additionally, the department was advised to consider further legal action. The upheld penalty of Rs. 2 lakhs on M/s. Shiv Enterprises was deemed justified and sustained by the Tribunal. In conclusion, the Tribunal held that the invoices from M/s. Ankit Textiles were invalid, and M/s. Shiv Enterprises had no right to the credit, leading to the recovery direction from the manufacturer/producer. The sustained penalty highlighted the seriousness of the case. The appeal was disposed of with the Tribunal's decision pronounced on 1-12-2006.
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