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2017 (6) TMI 213 - AT - Central ExciseCENVAT credit - duty paying invoices - bogus transaction - Held that - no goods were supplied from M/s AIPL to M/s AKI. The fraud, suppression and willful mis-declaration are writ large on the nature of these transactions - Inescapable conclusion from the evidence and findings of Commissioner is that M/s AIPL had no melting furnace, the electricity consumption was not commensurate with production shown by the Excise Department and they did not manufacture any copper ingots/copper scrap on their on account. Penalty u/r 25 of CER, 2002 - Held that - considering the fraud and willful suppression and mis-declarations done by M/s AIPL as elaborated in preceding paragraphs, the penalty on M/s AIPL is fully justified. Appeal dismissed - decided against appellant.
Issues:
1. Failure of appellants and respondent to appear for prosecution and defense. 2. Allegations of fraudulent transactions and misuse of cenvat credit. 3. Lack of production evidence at M/s AIPL. 4. Inconsistencies in records and statements regarding material transactions. 5. Imposition of penalties under Rule 25(1)(d) of Central Excise Rules, 2002. Issue 1: Failure to Prosecute and Defend The judgment notes the absence of both the appellants and the respondent during multiple hearings, indicating a lack of interest in pursuing their appeals. Despite the absence of the parties, the Ld. A.R. presented overwhelming evidence supporting the case. Issue 2: Fraudulent Transactions and Misuse of Cenvat Credit The investigation revealed that M/s AIPL did not show production of copper, leading to suspicions of fraudulent transactions. The cenvat credit availed by M/s AKI based on invoices from M/s AIPL was found to be unsupported by genuine transactions, raising concerns about the misuse of credit. Issue 3: Lack of Production Evidence at M/s AIPL Evidence from various visits to M/s AIPL's factory, statements from employees, and findings from the Punjab State Electricity Board indicated a lack of production activities at M/s AIPL. The absence of essential machinery and discrepancies in records further supported the conclusion that no genuine production occurred. Issue 4: Inconsistencies in Records and Statements Statements from employees of M/s AIPL, examination of transporters, and discrepancies in invoices highlighted inconsistencies in the recorded transactions. The mismatch between the purported transactions and the actual activities raised doubts about the authenticity of the business dealings. Issue 5: Imposition of Penalties The judgment upheld the Commissioner's decision to disallow the cenvat credit, confirming the demand and imposing penalties under Section 11AC of the Central Excise Act, 1944. Additionally, the penalty on M/s AIPL was reinstated under Rule 25(1)(d) of the Central Excise Rules, 2002, based on the fraudulent practices and willful misdeclarations observed. In conclusion, the judgment dismissed the appeal filed by the appellant and allowed the appeal by the Revenue, imposing penalties on M/s AIPL for the contraventions identified. The decision was based on the comprehensive examination of evidence, highlighting the fraudulent nature of the transactions and the need for accountability in compliance with the Central Excise regulations.
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