2013 (2) TMI 9 - HC - Central Excise

Cenvat credit availed fraudulently on the strength of 23 invoices issued without the physical receipts on goods mentioned therein - assessee seeking waiver of pre-deposit on duty, interest or penalty - Held that - Evidence on record indicates the likelihood of the allegations of the duty evasion being upheld and if there is slightest risk to the Revenue, the dispensation from the provisions of Section 35F should not be given. A perusal of order passed by the CIT reveals that each of the arguments, as is sought to be raised before this Court, has been examined in detail by the Commissioner of Income Tax. At the stage of waiver such findings cannot be brushed aside only for the reason that the show cause notice issued to supplier is still pending adjudication. The finding recorded against the appellants is of availing cenvet credit without physical receipt of the goods. Such allegation of fraud does not call for any indulgence at this stage from this court - against assessee.

Summary

Issues:
Challenge to order under Section 35G of the Central Excise Act, 1944 for waiver of pre-deposit on duty, interest, or penalty.

Analysis:
The appellants challenged an order passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi, requiring them to deposit a sum of Rs.75,00,000 within eight weeks. The substantial questions of law raised included misreading of evidence, undue hardship in making the pre-deposit duty, and differential treatment by the Tribunal. However, the High Court found that none of these questions warranted consideration. The appellants were accused of fraudulently availing cenvat credit without physical receipts based on invoices issued by another entity. This allegation was upheld by the adjudicating authority and the Commissioner of Central Excise. The Tribunal, considering the pending adjudication of the show cause notice issued to the other entity, refused to waive the pre-deposit requirement under Section 35F of the Act due to the risk to revenue if the duty evasion allegations were proven. The High Court emphasized that fraud allegations do not merit indulgence at the pre-deposit waiver stage.

The High Court highlighted that the Commissioner of Income Tax had thoroughly examined the arguments raised, indicating that the issues had been adequately considered at previous stages. The Court emphasized that the fraud allegation of availing cenvat credit without physical goods receipt was a serious matter that did not justify leniency. Therefore, the Court concluded that no substantial question of law arose for consideration in the appeal and dismissed the case.