2014 (8) TMI 19 - HC - Central Excise

Rebate / Refund claim on export of goods - it was found by the Department that the entire transactions were fake and as such they were only billing transactions only with a view to get the CENVAT credit as well as the rebate - Held that - there are concurrent findings of fact given by all the authorities below with respect to the fake transactions between the petitioner and M/s. Raju Synthetics Pvt. Ltd., we are of the opinion that all the authorities have examined the case in detail and as such no interference is called for. The conclusions arrived at by the authorities below are on the basis of evidence on record and such conclusions are not pointed out to be perverse. Under the circumstances, as such no interference in exercise of powers under Articles 226 & 227 of the Constitution of India, therefore, can be made. Merely because M/s. Raju Synthetics Pvt. Ltd. was not declared as fake company / supplier, it makes no difference. As such there is a distinction between the fake transaction and the fake company. When the transactions between the petitioner and the supplier were found to be fake transactions and it was found that the petitioner has failed to establish and prove that the petitioner used the inputs / goods in manufacturing of even the goods which came to be exported on which the actual excise duty or paid, the petitioner shall not be entitled to the rebate of the duty, which is not proved to be paid. Decision in the case of D.P. Singh (2011 (3) TMI 1370 - GUJARAT HIGH COURT) distinguished - Decided against the assessee.

Summary

Issues Involved:
1. Legitimacy of the rebate claims submitted by the petitioner.
2. Verification of transactions and physical movement of goods.
3. Applicability of Rule 18 of the Central Excise Rules, 2002.
4. Relevance of findings related to fake and non-existent suppliers.
5. Entitlement of the petitioner to the rebate despite alleged fraudulent transactions.

Issue-wise Detailed Analysis:

1. Legitimacy of the rebate claims submitted by the petitioner:
The petitioner, an exporter cum manufacturer, filed rebate claims amounting to Rs. 3,51,469/- and Rs. 1,98,432/- for goods exported on payment of central excise duty. The claims were scrutinized and found to be based on transactions with M/s. Raju Synthetics Pvt. Ltd., which were deemed fake. The Assistant Commissioner of Central Excise and Customs, Surat, rejected the rebate claims, a decision upheld by the Commissioner (Appeals) and the Revisional Authority. The petitioner argued that all necessary documents were submitted, and the goods were physically exported, thus entitling them to the rebate.

2. Verification of transactions and physical movement of goods:
The authorities found that the transactions between the petitioner and M/s. Raju Synthetics Pvt. Ltd. were mere billing activities without actual movement of goods. The suppliers, M/s. Om Textiles and M/s. Shree Ganesh Textiles, were declared non-existent and fake. The petitioner failed to provide evidence of actual physical movement of goods from these suppliers to M/s. Raju Synthetics Pvt. Ltd. and subsequently to the petitioner.

3. Applicability of Rule 18 of the Central Excise Rules, 2002:
The petitioner claimed compliance with Rule 18 of the Central Excise Rules, 2002, which entitles exporters to a rebate of duty paid on exported goods. However, the authorities emphasized that the rebate is contingent upon the genuineness of transactions and actual payment of duty. The fraudulent nature of the transactions invalidated the petitioner's claims under Rule 18.

4. Relevance of findings related to fake and non-existent suppliers:
The investigation revealed that M/s. Om Textiles and M/s. Shree Ganesh Textiles, from whom M/s. Raju Synthetics Pvt. Ltd. allegedly purchased goods, were fake entities. This finding was crucial in denying the rebate claims, as it established that the duty-paid status of the inputs was not genuine. The petitioner's reliance on these suppliers undermined their rebate claims.

5. Entitlement of the petitioner to the rebate despite alleged fraudulent transactions:
The petitioner argued that the actual export of goods on payment of duty should entitle them to the rebate. However, the authorities and the court maintained that the rebate is only justified if the inputs used were genuinely duty-paid. The concurrent findings of fact by all authorities confirmed the fraudulent nature of the transactions, leading to the denial of the rebate claims.

Conclusion:
The court upheld the decisions of the lower authorities, concluding that the transactions between the petitioner and M/s. Raju Synthetics Pvt. Ltd. were fake and intended solely for availing CENVAT Credit and rebate. The petitioner failed to prove the actual movement of goods and the genuine payment of duty on inputs. Consequently, the petitioner's rebate claims were rightfully denied, and the Special Civil Application was dismissed.