2017 (5) TMI 1455 - AT - Central Excise

Compounded Levy Scheme - manufacture of pattas/patties of Stainless Steel - The issue involved in the present appeals is that the Appendix-II challans submitted by the appellants to the Central Excise Superintendent is not actually a genuine document of duty payment - Held that - Admittedly, it is the Department, which had certain information regarding such fraudulent activity and based on that, initiated an inquiry. I do not find that the failure of the Department to detect the forgery much earlier should extend the advantage to the appellants. The appellants cannot gain, in any manner, on the basis of a forged document. Even if it is considered, for argument sake, that the Department should have found out the fraudulent activity much earlier, I do not find that the same can be the basis for keeping the appellants totally out of picture with reference to non-payment of duty. The fact remains that the appellants produced a fraud document claiming duty payment. The department is well within their right to proceed and recover the central excise duty, not paid to the Government. Extended period of limitation - Held that - since the documents have been established to be fraud or fake, obviously, the fraud was involved and that was sufficient to extend the period of limitation. Appeal dismissed - decided against appellant.

Issues:
- Dispute regarding the genuineness of Appendix-II challans submitted for central excise duty payment.
- Allegation of forged documents leading to loss of Government revenue.
- Appellants' defense of following proper payment procedure under Compounded Levy Scheme.
- Allegation of fraudulent activity within bank premises.
- Department's failure to detect forgery earlier.
- Applicability of duty demand and penalty.
- Legal precedents cited by both parties.
- Time bar for duty demand.

Issue 1: Dispute regarding the genuineness of Appendix-II challans:
The appellants, engaged in manufacturing stainless steel products under the Compounded Levy Scheme, faced allegations that the duty payment documents submitted were forged, leading to a loss of Government revenue. The Revenue initiated action against the appellants to recover central excise duty and impose penalties. The lower authorities confirmed duty demands and penalties, prompting the present appeals.

Issue 2: Allegation of fraudulent activity within bank premises:
The appellants argued that unauthorized individuals within the bank premises, including one individual named Shri Sachin, committed the fraud by forging duty payment documents. The appellants maintained that they followed the prescribed procedure, deposited the duty at the authorized bank, and produced stamped challans to the central excise officer. The police investigation supported the appellants' claim of innocence and highlighted the fraudulent activities within the bank.

Issue 3: Department's failure to detect forgery earlier:
The appellants contended that the Department's failure to detect the forgery promptly should not absolve them of duty payment obligations. The Department's inquiry into the fraudulent activity led to the discovery of forged documents submitted by the appellants, which were not legally recognized. The appellants' argument of innocence based on following the payment procedure was deemed insufficient by the authorities.

Issue 4: Applicability of duty demand and penalty:
The Department maintained that the submission of forged documents by the appellants resulted in the loss of Government revenue, justifying duty demands and penalties. The authorities emphasized that the appellants' plea of innocence due to the bank's involvement in the fraud was not legally sustainable, as the duty paid documents were invalid and could not justify the clearance of excisable goods.

Issue 5: Legal precedents cited by both parties:
The appellants cited various legal precedents to support their argument that they should not be held liable for duty demands in the circumstances of the case. However, the authorities relied on judgments, including those from the Tribunal and the Supreme Court, to establish that the demands were rightly confirmed by invoking the extended period due to the involvement of fraud and forged documents.

Issue 6: Time bar for duty demand:
The appellants raised the question of the time bar for duty demands, emphasizing certain legal cases. However, the authorities referenced a Supreme Court judgment and a Tribunal decision to support the extension of the period of limitation due to the involvement of fraud, thereby justifying the duty demands and penalties imposed on the appellants.

In conclusion, the judgment dismissed all appeals, finding them devoid of merit based on the established fraudulent activities, forged documents, and the legal precedents supporting the duty demands and penalties imposed on the appellants.

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