2013 (8) TMI 205 - AT - Central Excise

Cenvat credit - Authority held that assessee availed cenvat credit on the basis of fake invoices - Held that - provisions of section 11AC are invokable as the party fraudulently issued the invoices without accompanying the goods and have availed the cenvat credit with sole intention to defraud the Revenue - Unbeleivable that huge quantity of winding wire of copper has been shown to be transported through passenger vehicle Tata Sumo in single day from Delhi to Jaipur - these activities had been fraudulently undertaken by the appellant - Decided against Assessee. Imposition of penalty - Held that - on the basis of finding on clandestine removal that the invoices have been issued and no goods have been supplied to the appellant, it has ingredients of fraud, mis-statement, intention to defraud the Revenue - it is fit case to impose equivalent penalty under section 11AC - Thus there is no case of any reduction of penalty - Decided against Assessee.

Summary

Issues: Alleged fraudulent issuance of invoices without goods supplied, misuse of cenvat credit, penalty imposition

Issue 1: Alleged fraudulent issuance of invoices without goods supplied

The judgment addresses the case where the appellant, engaged in manufacturing electronic meters, was accused of receiving fake invoices for PVC insulated wires and winding copper wires without actually receiving the goods. The adjudicating authority found discrepancies in the quantity of goods shown to be received and issued, indicating a potential misuse of cenvat credit. The owner of the supplying company admitted to sending only invoices without supplying the goods physically. The tribunal invoked section 11AC, highlighting the fraudulent intent to defraud the revenue by availing cenvat credit based on fake invoices. The tribunal upheld the demand confirmed by the adjudicating authority, emphasizing the appellant's failure to receive the specified goods physically.

Issue 2: Misuse of cenvat credit

The judgment delves into the misuse of cenvat credit by the appellant based on the allegedly fake invoices received for PVC insulated wires and winding copper wires. The tribunal noted discrepancies in the quantity of goods purportedly received and issued within a short period, raising suspicions of fraudulent activities. The appellant failed to provide evidence of physically receiving the specified goods, leading to the confirmation of the demand by the adjudicating authority. The tribunal upheld the decision, emphasizing the appellant's attempt to avail cenvat credit without actual receipt of the goods as required by the Cenvat Credit Rules, 2002.

Issue 3: Penalty imposition

Regarding the penalty, the tribunal considered the appellant's plea for a reduction in the penalty amount. However, based on the established facts of fraudulent activities, including the issuance of invoices without goods supplied and the intent to defraud the revenue, the tribunal upheld the imposition of an equivalent penalty under section 11AC. The tribunal emphasized that the appellant failed to substantiate their claim of receiving the goods, as admitted by the supplier. The tribunal dismissed the appeal and upheld the penalty of Rs.2,05,200, noting that the appellant did not opt for the 25% penalty reduction by making timely payment post-adjudication.

In conclusion, the judgment highlights the serious implications of fraudulent practices in availing cenvat credit, emphasizing the importance of complying with legal requirements and substantiating claims of goods receipt to avoid penalties and adverse legal consequences.