2014 (6) TMI 791 - AT - Central Excise

Duty demand - CENVAT Credit - Clandestine removal of SS Flats - Fraudulent invoices - Held that - Once duly admitted facts have come on record indicating that no movement of goods have taken place and only invoice having moved, no question of goods showing existence and subsequent movement arises - The material facts, outcome of investigation, gravity of allegation and strength of evidence on record clearly show that Revenue s interests have been prejudiced by the appellants causing loss to it. It is also evident that fraudulent activities have been undertaken. Otherwise also tax evasion is looked at very seriously by courts since that hinders growth of the country. As per best established legal principles, fraud and justice do not dwell together. Further fraud nullifies everything. Passing of fraudulent cenvat credit through fake invoices has been clearly admitted and credit was also deposited back. Confessional statements coupled with fake invoices do not require any other evidence to prove. - Decided against assessee.

Summary

Issues Involved:
1. Clandestine removal of goods and fraudulent issuance of Cenvatable invoices.
2. Admissibility of Cenvat credit based on fraudulent invoices.
3. Reliance on statements recorded under Section 14 of the Central Excise Act, 1944.
4. Requirement of corroborative evidence to support allegations.
5. Legal principles regarding fraud and tax evasion.

Detailed Analysis:

1. Clandestine Removal of Goods and Fraudulent Issuance of Cenvatable Invoices:
The appellant, M/s. Arvind Enterprises, was implicated in the fraudulent issuance of Cenvatable invoices without the actual dispatch of goods. Investigations by the Directorate General of Central Excise Intelligence (DGCEI) revealed that M/s. Haryana Steel & Alloys Ltd. (HSAL) issued Cenvatable invoices for various steel products without accompanying goods, thereby enabling recipients to claim irregular CENVAT Credit. This fraudulent activity was admitted by Shri Ramesh Rawat, Executive Director of HSAL, under Section 14 of the Central Excise Act, 1944.

2. Admissibility of Cenvat Credit Based on Fraudulent Invoices:
The investigation found that M/s. Arvind Enterprises further issued 12 Cenvatable invoices involving Cenvat Credit of Rs.98,000/- to M/s. Advance Engineers, Faridabad, based on the fraudulent invoices from HSAL. The manufacturer availed of this credit, which was later debited upon realization of the irregularity. The adjudicating authority confirmed the demand along with interest and imposed an equal amount of penalty on the appellant.

3. Reliance on Statements Recorded Under Section 14 of the Central Excise Act, 1944:
The case heavily relied on the statements recorded under Section 14 of the Central Excise Act, 1944. Shri Ramesh Rawat admitted to issuing invoices without goods. Shri Arvind Tiwari, Authorized Signatory of M/s. Arvind Enterprises, acknowledged receiving goods through a broker without verifying the manufacturer's details. Shri Alok K. Bisht, Proprietor of M/s. Advance Engineers, admitted that the invoices received did not correspond to the goods described therein.

4. Requirement of Corroborative Evidence to Support Allegations:
The appellant argued that the department relied solely on the statement of Shri Ramesh Rawat without corroborative evidence such as transporter or driver statements. However, the Tribunal found that the admitted facts and confessional statements were sufficient to establish the fraudulent activity. The Tribunal referenced a similar case (Final Order No.A/55185-55187/2013-SM (Br)) where reliance on statements without corroborative evidence was deemed justified.

5. Legal Principles Regarding Fraud and Tax Evasion:
The Tribunal emphasized that fraud and justice do not coexist and that fraud nullifies everything. The fraudulent passing of Cenvat credit through fake invoices was admitted, and the credit was deposited back. The Tribunal upheld the findings of the Commissioner (Appeals), noting that fraudulent activities and tax evasion are serious offenses that hinder the country's growth.

Conclusion:
The Tribunal dismissed the appeal, affirming the Commissioner (Appeals)'s decision. The material facts, evidence, and confessional statements clearly indicated fraudulent activities, justifying the imposition of penalties and the recovery of irregular Cenvat credit. The judgment underscored the importance of integrity in tax matters and the severe consequences of fraudulent practices.