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2015 (11) TMI 90 - AT - Central ExciseAvailment of fraudulent CENVAT Credit - Bogus invoices - Non receipt of actual goods - Held that - Revenue has produced evidence from the bank of the appellant that no money has been paid to the purported five suppliers of sponge iron. The least that is expected from the appellant was to produce evidence from the banking channels that the money for the so called as sponge iron purchased was indeed paid to the five suppliers, corresponding to the alleged fictitious invoices. In addition, the appellant could have produced some transportation documents and the transporter to prove that the goods have been transported from the manufacturers or dealers place to the appellant s factory. Since no explanation whatsoever is coming forward from appellant, in our view the case against the appellant stands even if the statements given by seven persons are ignored. In view of this position, in our view the contentions of the revenue are correct and the demands of duty, interest and penalty, etc. are in order. The penalty under Section 11AC is correctly imposed as this is a case of fraudulent availment of Cenvat credit, interest under section 11AB would be payable. As far as the appellant No.2 & 3 are concerned; they were the directors at the relevant time. Their conduct during investigation as also the statements made by Shri Naval Kishore Vasu, General Manager and Shri KK Agarwal, authorised signatory leaves no doubt that the fraudulent availment of Cenvat credit was at their instance alone. Shri Naval Kishore Vasu was authorised to give statement by appellant No.2 & 3 and therefore, in a way the appellant No.2 & 3 have admitted their role in the fraudulent availment of Cenvat credit, we find that penalty imposed are not on the higher side. - Decided against assesse.
Issues Involved:
1. Fraudulent availment of Cenvat credit. 2. Denial of cross-examination of witnesses. 3. Burden of proof regarding admissibility of Cenvat credit. 4. Conduct of the appellant's directors. 5. Imposition of penalties and interest. Detailed Analysis: 1. Fraudulent Availment of Cenvat Credit: The appellants availed Cenvat credit amounting to Rs. 4,49,99,766/- during March 2004 to July 2006 on the purported procurement of sponge iron from five suppliers. The Revenue alleged that no sponge iron was received, and the purchases were bogus with fake invoices. Investigations revealed that the suppliers denied issuing the invoices or supplying goods, and no payments were made to the suppliers as per bank records. Statements from the appellant's General Manager and authorized signatory confirmed the fraudulent activities directed by the company's directors. The Commissioner confirmed the demand of Rs. 4,49,99,766/-, imposed equal penalties under Rule 13 of the Cenvat Credit Rules, 2002/Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, and interest under Section 11AB. 2. Denial of Cross-Examination of Witnesses: The appellants contended that they were denied cross-examination of key witnesses whose statements were relied upon by the Revenue. The Tribunal noted that while cross-examination is essential, the burden of proof regarding the admissibility of Cenvat credit lies on the appellants. The Tribunal referenced the case of Bhagwati Steelcast Ltd., which elaborated that Cenvat credit can be taken only after receipt of inputs in the factory, covered by duty-paying invoices. In this case, the appellants failed to produce evidence of payment or transportation of goods. 3. Burden of Proof Regarding Admissibility of Cenvat Credit: The Tribunal emphasized that the burden of proof regarding the admissibility of Cenvat credit lies on the manufacturer taking such credit, as stipulated in Rule 7(5) of the Cenvat Credit Rules. The appellants did not provide any evidence of payment through banking channels or transportation documents to prove the receipt of goods. The Tribunal concluded that even without the statements of witnesses, the case against the appellants stands due to the lack of evidence from the appellants. 4. Conduct of the Appellant's Directors: The Tribunal found the conduct of the appellant's directors questionable as they avoided appearing in response to summonses and authorized their General Manager to give statements on their behalf. During adjudication, they sought to cross-examine the same person. The Tribunal noted that the directors' behavior and the statements made by the General Manager and authorized signatory confirmed the fraudulent activities at the directors' instance. 5. Imposition of Penalties and Interest: The Tribunal upheld the penalties and interest imposed by the Commissioner. The penalty under Section 11AC was deemed appropriate due to the fraudulent availment of Cenvat credit, and interest under Section 11AB was payable. The appeals of the directors involved in the fraudulent activities were dismissed, while the appeal of one director not found involved was allowed. Conclusion: The Tribunal dismissed the appeals of the first three appellants due to their involvement in fraudulent activities and upheld the penalties and interest imposed. The appeal of the fourth appellant, who was not found involved, was allowed.
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