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TMI Blog2009 (12) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer in the wake of the recent frauds detected and the ongoing investigations in various Commissionerates. The appellants neither appeared for the personal hearing fixed for the purpose nor they have any written submissions. Commissioner, Central Excise, Surat-I has vide Alert Circular dated 29-12-04, informed that cases have been booked against some units who have obtained Central Excise Registration under Rule 12B for manufacturing of grey fabrics showing the address which were occupied by the other persons. Further, they did not have any manufacturing facilities to manufacture grey fabrics. They have made only paper transactions for purchase of yarn from various spinners without purchasing the same, shown the manufacturing of grey fabrics without manufacturing the same and sold the invoices by mentioning sale of grey fabrics without selling the same to different fabric processing units/dealers/merchant manufacturers/exporters, fictitiously with the sole purpose of passing on the Cenvat credit on basis of these invoices/bills. Further, Additional Commissioner, Central Excise, Surat-I has vide letter F.No. IV/9-HIPU-VII/43d/2004-05, dated 11-2-05, informed the names of the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to defaults committed by seller, detention and seizure of machineries of petitioner not sustainable - Rule 15 of Cenvat Credit Rules, 2004 - Section 110 of Customs Act, 1962. The order-in-original and order-in-appeal are against the judicial pronouncements in that it has erroneously concluded that as the Cenvat Credit is availed by the manufacturer on the bases of documents issued by bogus units and as such duty paid on their clearance is wrong, therefore the exported goods cannot be said to be the duty paid goods. 4.3 The responsibility of the exporter receiving the duty paid goods for export is similar to the duty of the manufacturer or producer of excisable goods to ensure that the appropriate duty of excise has been paid on the inputs on which it is availing the Cenvat credit, Rule 9(3) of the Cenvat Credit Rules, 2002. The Assistant Commissioner, Rebate, Mumbai-I did not pass any order on merit. The applicants have purchased the finished fabrics and on which the appropriate duty has been paid by the manufacturer. The action is required to be taken for recovery that may be taken against the manufacturer who has defaulted and not against the genuine exporter. The applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be issued by a fictitious firm on the strength of a simple report by the postal authority, when the invoices contained all details regarding payment of duty and even sales tax number of supplier - Rule 57G of erstwhile Central Excise Rules, 1944 - Rule 9 of Cenvat Credit Rules, 2004 (para 2) 4.4 The applicants further state that as an exporter they have not adopted any mal practice or tried to evade any Government revenue. Being an exporter cannot pay any Central Excise Duty directly to the Government account on exported goods as the applicants are not registered Central Excise assessee. In fact, they have paid the purchase proceed of exported goods along with Central Excise duty to the manufacturer according to procedure for exportation of goods on the reasonable belief that the manufacturer has supplied duty paid goods which are exported. Without any fault of the applicant, the eligible benefit of rebate denial is a gross injustice against them being an exporter. The order-in-original passed by the Assistant Commissioner (Rebate) and rejecting the Appeal of the applicants by the Hon ble Commissioner (Appeals) is illegal. Applicants hope, your honour will give justice by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his wrong it was availed without taking reasonable steps in terms of Rule 7 of Cenvat Credit Rules, 2002 [now Rule 9(2) of Cenvat Credit Rules, 2004], the duty paid on exported goods through debit entry of this wrongly availed credit cannot be rebated to the applicant/merchant exporter who purchased the goods and exported them. The only charge or allegation forming the genesis and basis for denial of rebate claim to the merchant/exporter is therefore not against him but against the manufacturer supplier who availed Cenvat Credit wrongly and availed the same for duty payment of goods exported by the applicant merchant exporter. In this regard. Govt. observes that sufficient legislative and machinery provisions exist in Central Excise Act/Rules to recover such allegedly wrongly availed and utilized credit from the manufacturer supplier of finished goods along with interest and penalty. Rule 14 of Cenvat Credit Rules, 2004 provide, that where Cenvat Credit has been taken or utilized wrongly, it has to be recovered from the manufacturer along with interest and provisions of Section 11A (recovery of duties not levied or not paid or short-paid or erroneously refunded) and 11AB (interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty element. As per the ratio of these judgments, some of which have also been cited in support by applicant, action in such cases for recovery and penal action lies on the supplier manufacturer who wrongly took and utilized the credit and not on user manufacturer. This issue was examined in detail by the Tribunal in case of R.S. Industries - 2003 (153) E.L.T. 114 (T.-Del.) wherein it was held that In these 12 appeals, arising out of a common Order-in-Original No. 41/2001 dated 30-10-2001 passed by the Commissioner, Central Excise, Delhi-I, the common issue involved is whether the Modvat credit is to be disallowed to all the appellants on the ground that the supplier of the inputs has taken the Modvat credit on fake and bogus invoice and utilized the said credit towards payment of duty in respect of inputs supplied to the appellants. 2.... The appellants availed of Modvat credit of the duty paid on the inputs received from the suppliers, that one of the supplier of inputs is M/s. Prerna Metal Industries; that the inquiries initiated against the said Prerna Metal Industry revealed that they had taken the Modvat credit on the strength of invoice which were fake and bogus an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant had taken credit on basis of Central Excise invoices containing duty payment particulars such credit cannot be denied on the basis that such duty had in fact not been paid by the manufacturer supplier. 10. Another ground forming the basis for denial of rebate is also that in terms of Explanation to sub-rule (2) of Rule 7 Cenvat Credit Rules, 2002 [now sub-rule (3) of Rule 9 of Cenvat Credit Rules, 2004] responsibility is cast on the manufacturer who avails credit to take reasonable steps to ensure that the inputs in respect of which credit is availed are goods on which appropriate duty of excise as indicated in the documents has been paid. In the instant case, the manufacturer-supplier M/s. Siddhi Creative and M/s. Ashapura Textile Industries as alleged had failed to take such reasonable steps for verifying addresses of manufacturers who issued invoices to them. As per ratio of various decisions discussed above, it is, however observed that action for not taking such reasonable steps as alleged definitely lies squarely on the manufacturer supplier but not on the applicant/merchant exporter who at third stage purchased the goods bonafidely in normal course of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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