2017 (4) TMI 840 - AT - Central Excise

CENVAT credit - duty paying invoices - Held that - There is then no doubt that appellant had issued cenvatable invoices knowing fully well that there is no movement of goods and thus facilitated availment of irregular credit by fabricated documentation. Appellants have sought to defend their actions contending that it was only a book adjustment for showing more turnover in their books of accounts - imposition of penalty u/r 26 set aside - also considering the crucial and important role played by the appellant in the commitment and execution of the fraud, penalty amount of ₹ 25,00,000/- is very much proportionate to the acts and omissions of the appellant - appeal dismissed - decided against appellant.

Summary

Issues: Alleged fraudulent availment of cenvat credit by issuing invoices without actual supply of materials; Imposition of penalty under Rule 26 of Central Excise Rules 2002.

Analysis:
- The case involved the appellant, accused of facilitating fraudulent cenvat credit availment by issuing invoices without actual supply of materials to a manufacturer. The appellant contested the allegations, claiming the transactions were mere book adjustments without any movement of goods, intending to inflate turnover for funding purposes.
- The Revenue, represented by Shri Arun Kumar, supported the adjudication, emphasizing the established modus operandi of fraudulent credit availment through fabricated documentation.
- Upon hearing both sides, the Tribunal focused on the penalty of ?25,00,000 imposed on the appellant under Rule 26 of the Central Excise Rules, 2002, for their role in the fraudulent cenvat credit amounting to ?74,93,250 availed by the manufacturer.
- The Tribunal noted that the department substantiated the fraudulent scheme, revealing discrepancies in vehicle details mentioned in the invoices and obtaining statements from the appellant's Executive Director admitting to the irregularities in issuing invoices without actual material movement.
- Despite the appellant's defense of the transactions being book adjustments, the Tribunal found their actions facilitated irregular credit availment, dismissing the appellant's contentions as futile attempts to justify their conduct.
- Ultimately, the Tribunal upheld the penalty, deeming it proportionate to the magnitude of the fraud committed and the appellant's significant role in executing the scheme. The appeal was dismissed, and the stay application was also disposed of accordingly.

This detailed analysis outlines the key arguments, findings, and the Tribunal's decision regarding the alleged fraudulent cenvat credit scheme and the imposition of the penalty under Rule 26 of the Central Excise Rules 2002.