2014 (1) TMI 1337 - HC - Central Excise

Waiver of pre deposit - Tribunal dismissed appeal for failure to make pre deposit - Held that - dismissal of an appeal for failure to deposit the amount of pre-deposit determined, in essence, deprives a party its right of filing an appeal but as facts of the present case prima-facie disclose an unmitigated fraud perpetuated by the appellant while availing cenvat credit on raw material allegedly procured by them from various sources, are not inclined to grant any relief to the appellant - The appellant is a manufacturer in non-alloy steel ingots and availed benefit of cenvat credit on raw material procured by them from various sources. A search of the appellant s premises revealed that inputs were not received by the appellant and the transactions which formed basis for availing cenvat credit, were mere a paper transactions. The appellant s supervisor and melter made statements which clearly prove that the material received could not be used for melting. A finding of fact was also recorded that out of 203 invoices, corresponding goods received are not available with regard to 142 invoices. Out of ten transporters, seven were found to be nonexistent and three have denied having transported material to the appellant. The registration numbers of four trucks were found to be fake - no reason to hold that the CESTAT committed any error in directing the appellant to deposit ₹ 60 lacs of duty determined by the respondents. The second appeal was rightly dismissed for failure to abide by the order of pre-deposit - Decided against assessee.

Summary

Issues:
1. Challenge to the order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directing pre-deposit of duty and penalty.
2. Allegations of perpetuating fraud while availing cenvat credit.
3. Financial hardship of the appellant in making the pre-deposit.

Analysis:
1. The appellant challenged the CESTAT's order directing a pre-deposit of Rs.60 lacs, contending that the order imposing duty and penalty was null and void due to violations of natural justice. The appellant argued that witnesses' statements forming the basis of the assessment order were not supported, and witnesses denied their statements during cross-examination. The appellant, citing financial losses, proposed to pay Rs.10 lacs and provide a bank guarantee for the balance amount. The respondents argued that the appellant committed fraud in availing cenvat credit, with discrepancies in material procurement and transportation. Despite the appellant's financial hardship, the court found no reason to reduce the pre-deposit amount or allow alternative guarantees, denying relief to the appellant.

2. The appellant, a manufacturer of non-alloy steel ingots, was accused of perpetuating fraud in availing cenvat credit on raw material. Investigations revealed discrepancies where material received was unusable, with missing goods receipts for numerous invoices and non-existent transporters. The court noted that the appellant's claims of witness cross-examination issues did not warrant relief, given evidence of fraudulent practices. The court upheld CESTAT's decision to require a pre-deposit of Rs.60 lacs, dismissing the appeal challenging the pre-deposit order.

3. Despite considering the appellant's financial hardship and the impact of dismissing an appeal for failure to deposit, the court emphasized the seriousness of the fraud allegations. The court highlighted the lack of genuine transactions in material procurement, fake transporter details, and discrepancies in invoices. Due to the substantial evidence of fraudulent activities, the court upheld the pre-deposit requirement and dismissed the appeals without costs, emphasizing the gravity of the appellant's actions in availing cenvat credit through fraudulent means.