2012 (2) TMI 415 - AT - Central Excise

Availment of CENVAT Credit - Availment in wrong and fraudulent manner on the basis of invoices for PVC compound wrong and fraudulent manner on the basis of invoices for PVC compound issued by M/s. Kashish Products Impex Pvt. Ltd. without actually receiving any material - Held that - while the miscellaneous application is for rectification of the stay order dated 25-7-2011 on the ground that there are mistakes apparent from record in the stay order and the prayer in the application is for rectification of the order by withdrawing the same, the application does not mention as to under which provision of the Central Excise Act, the same has been filed. If, it is treated as application for rectification of the mistakes apparent from record under Section 35C(2), the same would not be maintainable as what Section 35C(2) provides is rectification/amendment of an order passed by this Tribunal under sub-section (1) of Section 35C, while the impugned order is not an order passed under Section 35C(1), but an order passed under Section 35F on the question of waiver of pre-deposit. The burden to prove that the material covered under invoices, on the basis of which Cenvat credit had been taken by the appellant had actually been received by them, would be on the appellant and prima facie we find that no evidence in this regard has been produced by the appellant. Thus, the absence of manufacturing activity in the factory of KPIPL on the date of officer s visited to the factory in 2006 is not the only ground for conclusion that the invoices issued by KPIPL to the appellant, on the basis of which Cenvat credit amounting to Rs. 72,56,374/- was taken, were bogus invoices - Time to make deposit is extended to six weeks - Decided partly in favour of assessee.

Summary

Issues: Allegation of wrongful Cenvat credit claim based on fraudulent invoices. Rectification of stay order by the Tribunal.

Allegation of wrongful Cenvat credit claim:
The case involves an appellant company accused of wrongfully claiming Cenvat credit totaling Rs. 72,56,374/- based on invoices for PVC compound issued by M/s. Kashish Products Impex Pvt. Ltd. (KPIPL) without receiving any material. The Commissioner confirmed the Cenvat credit demand, imposed penalties on the company and its directors. The appellants filed appeals and stay applications against the Commissioner's order.

Rectification of stay order by the Tribunal:
The Tribunal, in a stay order, directed the appellant company to deposit Rs. 50,00,000/- within eight weeks, waiving the pre-deposit requirement for the remaining amount until the appeal's disposal. A miscellaneous application was filed to rectify and withdraw this stay order.

The appellant's counsel argued that the Tribunal's observations lacked basis, citing mistakes in the order. They claimed that evidence supported the receipt of material and that the invoices were not bogus. The Departmental Representative opposed the rectification application, stating it was akin to an appeal and involved re-appraisal of evidence.

The Tribunal noted that the rectification application was not under the correct provision and that rectification under Section 35C(2) required an obvious and patent mistake. The evidence presented by the department, including denials by truck owners/drivers mentioned in the invoices, shifted the burden of proof to the appellant. Lack of evidence of material receipt and the possibility of two views regarding the alleged mistakes were highlighted.

In conclusion, the Tribunal found no merit in the rectification application, deeming it not maintainable. The stay order was upheld, with an extension granted for compliance. The miscellaneous petition was dismissed, and compliance was to be reported by a specified date.