2012 (9) TMI 674 - AT - Central Excise

Extended period of limitation - Denial of Cenvat Credit appellant contended that no objection to returns filed by the appellant, nor any discrepancy in its excise records were found Held that - Fake invoices were the medium to avail cenvat credit without actual goods being received by the appellant - bogus transport numbers were mentioned in the invoices and that remained un-rebutted - Section 17 of the Limitation Act, 1963 has embodied cardinal principle that fraud nullifies everything. The fraudulent act of the appellant has caused loss to Revenue - adjudication is not time barred.

Summary

Issues:
1. Denial of Cenvat Credit for MS scrap used in manufacture.
2. Allegations of fraud and misuse of invoices to claim credit.
3. Time-barred proceeding and loss caused to Revenue.

Analysis:

Issue 1: Denial of Cenvat Credit for MS scrap used in manufacture
The Appellant argued that since they received invoices for MS scrap from a specific supplier and used them in manufacturing without objection from the Department, there should be no denial of Cenvat Credit. They highlighted the absence of evidence showing that the scrap was not used in manufacturing. The Appellant also pointed out the history of the case, where penalties were initially imposed but later waived by the Tribunal. They asserted that the proceeding was time-barred as the Department was aware of the facts while dealing with the Appellant in a related case.

Issue 2: Allegations of fraud and misuse of invoices to claim credit
The Respondent, represented by the JCDR, contended that the Appellant acted as a conduit to cause revenue loss by misusing invoices and claiming Cenvat Credit for goods mentioned in fake invoices. It was argued that there was a clear nexus between the Appellant and the supplier, as evidenced by the modus operandi detailed in the appellate order. Reference was made to a similar case decided in favor of Revenue by the High Court. The JCDR emphasized that fraud nullifies limitations on adjudication and that the Appellant should bear the risk of loss to Revenue unless they demonstrate clean conduct.

Issue 3: Time-barred proceeding and loss caused to Revenue
The JCDR further argued that in cases involving fraud, adjudication cannot be time-barred, citing a Supreme Court decision. It was emphasized that when there is a loss to Revenue, the onus is on the assessee to prove clean conduct. The fraudulent acts of the Appellant were highlighted as causing loss to Revenue, justifying the dismissal of the appeal. The Appellate Tribunal, after hearing both sides and examining the record, found evidence of collusion and fraudulent practices by the Appellant to avail Cenvat Credit through fake invoices. The Tribunal noted that the Appellant failed to rebut the findings regarding bogus transport details in the invoices, indicating a deliberate attempt to deceive and gain at the expense of public revenue. The Tribunal concluded that the fraudulent actions of the Appellant warranted the dismissal of the appeal, as no evidence was presented to demonstrate clean conduct or refute the allegations of fraud and revenue loss.

This detailed analysis of the judgment provides a comprehensive overview of the issues raised, arguments presented, and the Tribunal's decision based on the evidence and legal principles involved in the case.