2012 (7) TMI 897 - HC - Central Excise

Summary

Issues Involved:

1. Fraudulent Availment of Cenvat Credit
2. Allegations of Collusion and Conspiracy
3. Tribunal's Oversimplification of the Case
4. Remand for Fresh Decision by Tribunal

Summary:

Fraudulent Availment of Cenvat Credit:

The appeal was filed u/s 35G of the Central Excise Act, 1944, challenging the CESTAT's order dated 21.07.2009/31.07.2009. The respondent had taken Cenvat Credit of Rs. 3.86 Lakhs based on invoices from M/s Nerka Chemicals Pvt. Ltd., which were found to be fabricated, as no duty was paid by the manufacturer, M/s N.H.Harsora Pvt. Ltd. The Additional Commissioner ordered recovery of Rs. 7.72 Lakhs, which was upheld by the Commissioner (Appeals). However, the Tribunal allowed the respondent's appeal, stating that the proceedings should have been initiated against the manufacturer.

Allegations of Collusion and Conspiracy:

The department alleged that the respondent, along with M/s N.H.Harsora and M/s Nerka Chemicals, engaged in a conspiracy to avail Cenvat Credit fraudulently. Investigations revealed that the respondent availed credit based on fake invoices, leading to wrongful availment of Rs. 7.72 Lakhs in Cenvat Credit. The adjudicating authority concluded that the respondent was part of a pre-planned conspiracy involving illicit removal of goods and wrongful availment of Cenvat Credit.

Tribunal's Oversimplification of the Case:

The Tribunal's decision was based on the premise that the respondent could not be expected to verify if the dealer had availed credit or if the manufacturer had discharged duty liability. The Tribunal held that the remedy lay in initiating proceedings against the manufacturer. However, this Court found that the Tribunal oversimplified the case by ignoring allegations of fraud and collusion and failing to discuss the merits of the case in detail.

Remand for Fresh Decision by Tribunal:

This Court remanded the matter to the Tribunal for a fresh decision, emphasizing that the Tribunal should comprehensively address the factual aspects and allegations of fraud and collusion. The Tribunal is directed to decide the matter afresh by 30th April 2013, without being influenced by its earlier order or this Court's observations. The substantial question of law is answered accordingly, and the appeal is allowed to the extent of remanding the case for a fresh decision.