9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1242 - AT - Central ExciseCENVAT Credit - availment of Credit of duty paid under yarn and fabrics before sending the same to job worker of the processor following the procedure containing Rule 4(5)(a) of CENVAT Credit Rule 2004 - eligibility for credit even after revocation of Rule 12B of Central Excise Rules with effect from 9.7.2004 - credit denied on the ground that the appellant had no facility to manufacture the dyed and printed fabrics and hence they are not the manufacturers - bogus invoices - period 09.07.2004 to 30.06.2005 - Invocation of extended period of limitation. Whether the appellants are eligible to CENVAT Credit even after revocation of Rule 12B of Central Excise Rules with effect from 9.7.2004? - HELD THAT - The issue of applicability of CENVAT Credit to the appellants is no longer res integra. Tribunal in the case of MAHARASHTRA DYEING PRINTING WORKS VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI 2011 (3) TMI 1228 - CESTAT, MUMBAI where it was held that It is not clear in this case whether such goods, duty was paid on the goods invoiced to appellant, on which credit was availed were in fact received by the trader prior to 09/07/2004. If the trader issues an invoice of 18/08/2004; it has to be presumed that the Excise registration certificate issued to him was valid. If that be so, the issue needs to be considered from this angle also. Availment of CENVAT credit was held to be correct on the principle of revenue neutrality by Tribunal in the case of COMMISSIONER OF C. EX., PUNE-I VERSUS KEETEX 2007 (10) TMI 243 - CESTAT, MUMBAI . There are no hesitation whatsoever in holding that irrespective of the registration or otherwise, under Rule 12B, the appellants are entitled to CENVAT Credit on inputs used by them. Whether the corrigendum/addendum dated 17.9.2007 to the show-cause notice is valid in law? - HELD THAT - It is not the appellant's claim that the original show-cause notice and the addendum were on separate issues. The original show-cause notice dated 9.8.2005 seeks to demand the inadmissible credit of Rs. 2,88,89,873/- availed by the appellants after the rescinding of Rule 12B. The addendum 17.9.2007 supplements the allegations in the original show-cause notice and states that out of the original demand of inadmissible credit of Rs. 2,88,89,873/-, Rs. 1,21,61,218/- is also inadmissible on the allegation that the CENVAT credit was fraudulently availed on bogus invoices issued by non-existing/fraudulent suppliers. Therefore, there is no legal infirmity in the issuance of addendum in this regard. Whether the appellant i.e., M/s. Venus International have availed credit on the basis of bogus invoices and if so, whether they have rendered themselves to pay CENVAT credit thus availed? - HELD THAT - It was incumbent upon the appellants to satisfy themselves about the name, address and existence of the suppliers. We find that even going by the appellants own contentions, some of the suppliers are not traceable. It would be very na ve to believe that the appellants are not concerned with the whereabouts of their suppliers. The fact that in most of the cases, cheques were encashed by third parties unconcerned with the suppliers, supports the contention of the department. Therefore, we find that the appellants have engaged themselves in a fraudulent activity inasmuch as availing credit on the basis of bogus invoices and again claiming the same as rebate on the exported goods. Fraud committed vitiates every activity of the appellants - the credit of Rs. 1,21,61,218/- was fraudulently availed by the appellants and the same requires to be reversed/paid by them along with applicable interest and penalty. Suppression or mis-declaration or mis-statement with an intent to evade payment of duty - HELD THAT - Revenue has contended that the addendum dated 17.09.2007 issued on the basis of further investigation, proved that the appellants availed fraudulent Cenvat credit; the issue in the show cause notice and addendum was same i.e. disallowance of Cenvat credit; No additional demand has been issued by addendum; investigation proved that the appellant continued to work in the status/capacity of manufacturer under erstwhile Rule 12B only with an intention to avail fraudulent Cenvat credit and to claim fraudulent rebate; As fraud was involved in the matter, the show cause notice correctly invoked proviso to Section 11; the addendum also was issued well within the time of 5 years - M/s. Venus International are liable to pay fraudulently availed CENVAT credit of Rs. 1,21,61,218/- along with interest and equal penalty under Rule 13 of the Cenvat credit of the Cenvat Credit Rules, 2002/Rule of the Cenvat credit Rules, 2004 read with Section 11AC of Central Excise Act-1944. Whether penalties are imposable on different appellants? - HELD THAT - A penalty of Rs. 20,00,000/- has been imposed on Mr. Prakash Jokhani and Bimal Jokhani. However, the learned adjudicating authority has not clearly delineated the role of Shri Prakash Jokhani separately viz-a-viz. Bimal Jokhani. In fact, Adjudicating Authority finds that Shri Prakash Jokhani cooperated with the investigation, whereas Shri Bimal Jokhani has not responded to summons and has not joined the investigation. Therefore, imposing similar penalty on both of them defies logic. Looking into the role played by Shri Prakash Jokhani, we are inclined to reduce the penalty from Rs. 20,00,000/- to Rs. 5,00,000/-. Appeal allowed in part.
Issues Involved:
1. Eligibility of CENVAT Credit after revocation of Rule 12B. 2. Validity of the addendum dated 17.09.2007 to the show-cause notice. 3. Allegation of availing credit on bogus invoices. 4. Imposition of penalties on different appellants. 5. Sustainability of the Revenue appeal. Detailed Analysis: 1. Eligibility of CENVAT Credit after revocation of Rule 12B: The appellants continued to avail CENVAT credit even after the rescission of Rule 12B on 09.07.2004. The department argued that the appellants were no longer manufacturers post-rescission, thus ineligible for CENVAT credit. However, the appellants contended they were manufacturers under Section 2(f) of the Central Excise Act, 1944, independent of Rule 12B. They maintained all records, debited and credited CENVAT as per Rule 4(5)(a) of CENVAT Credit Rules, 2004, and exported goods under proper procedures. The Tribunal found that the issue of CENVAT credit eligibility post-Rule 12B rescission was settled in favor of the appellants in previous cases, emphasizing revenue neutrality and the correctness of credit availment. 2. Validity of the addendum dated 17.09.2007: The addendum supplemented the original show-cause notice by alleging that Rs. 1,21,61,218/- of the total CENVAT credit was availed on bogus invoices. The appellants argued the addendum was beyond the scope of the original notice and time-barred. The Tribunal held that the addendum was valid as it supplemented the original issue of inadmissible credit and did not introduce a new demand, thus falling within the permissible scope. 3. Allegation of availing credit on bogus invoices: The department provided evidence that several suppliers were non-existent or issued bogus invoices without actual goods movement. The appellants countered that they had taken reasonable steps to verify suppliers as per Rule 9(3) of CENVAT Credit Rules. The Tribunal found that the appellants failed to ensure the identity and existence of suppliers, with evidence showing third-party encashment of cheques and non-existent suppliers. Consequently, the Tribunal concluded that the appellants fraudulently availed CENVAT credit and upheld the demand for reversal/payment of Rs. 1,21,61,218/- along with applicable interest and penalty. 4. Imposition of penalties on different appellants: Penalties were imposed on various appellants, including a significant penalty on Mr. Prakash Jokhani and Bimal Jokhani. The Tribunal reduced the penalty on Mr. Prakash Jokhani from Rs. 20,00,000/- to Rs. 5,00,000/- due to his cooperation during the investigation. The penalty on Shree Nathji Textiles was set aside as their existence was not in question, and the return of goods indicated genuine transactions. 5. Sustainability of the Revenue appeal: The Revenue appealed, arguing for a higher penalty and interest on the entire inadmissible credit. The Tribunal dismissed the Revenue's appeal as infructuous, maintaining that the credit availed post-Rule 12B rescission was valid, and penalties for fraudulent credit were appropriately imposed. Judgment Summary: - Appeal No. E/843/2009: Penalty on Mr. Prakash Jokhani reduced to Rs. 5,00,000/-. - Appeal No. E/844/2009: CENVAT credit post-Rule 12B rescission upheld; fraudulent credit of Rs. 1,21,61,218/- to be reversed/paid with interest and penalty. - Appeal No. E/852/2009: Appeal by Shree Nathji Textiles allowed. - Appeal No. E/911/2009: Revenue's appeal dismissed as infructuous.
|
