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TMI Blog2013 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... .30 lakhs towards penalty. - E/1450/2010 & E/1768/2010 - - - Dated:- 14-2-2012 - Archana Wadhwa And Mathew John, JJ. Appellants Rep by: Shri J.P. Kaushik, Adv., Shri Ravinder Singh, Consultant Respondent Rep by: Shri R.K. Verma, SDR Per: Archana Wadhwa: Both stay petitions are being disposed of by a common order, as they arise out of the same impugned order passed by the Commissioner. The duty of Rs.1,06,01,497/- stands confirmed against M/s.Satvik Industries alongwith imposition of penalty of identical amount. The duty of Rs.16,07,133/- stands confirmed against M/s.Genuis Electrical Electronics (P) Ltd. alongwith imposition of penalty of identical amount. 2. After hearing Shri J.P.Kaushik, learned Advocate appearing for the appellant and Shri R.K.Verma, learned SDR appearing for the Revenue, we find that M/s.Satvik Industries are engaged in the manufacture of PVC insulated wires, winding wire of copper and non-adhesive tapes falling under chapter heading No.8544.90 3920.12 of Central Excise Tariff Act, 1985. Their factory was visited by the central excise officers on 7.2.2003, who conducted the various checks and verification. As a result, it came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available credit to the buyers of their final products. As such, he submits that inasmuch as the credit was availed by the appellant only on the basis of invoices of closed unit, the said credit was not available to them and has been rightly confirmed against them. The appellant should be directed to deposit the same. 6. At this prima facie stage, we find that the credit availed by M/s.Satvik Industries stands denied to them on the ground that the invoices issued by M/s.Aggarwal Plastic (India) was without supplying the raw materials. The credit so availed based upon the invoices stands wrongly utilized by the appellant for payment of duty on their final products, which were actually not manufactured by them. The contention of the learned Advocate is that in any case by debiting the modvat credit, for payment of duty on final products, which according to the Revenue was not manufactured by them, the entire credit stands reversed by them. At this prima facie stage, we find that, even according to the Revenue, the said appellant had not manufactured final products. As such, it can be prima facie concluded that there was no liability on the part of the said appellant to pay excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries is required to be denied and recoverable from them, as it has been done in the case of M/s.Genuis Electrical Electronics (P) Ltd. We are not aware of the proceedings in respect of the other buyers of final products of M/s.Satvik Industries, as no references stands made to them. 10. However, we take note of the learned SDR's contention that by adopting the above modus operandi, the appellant have indulged in the passing of fraudulent modvat credit to their buyers. This is a serious allegation. Keeping in view the fact that a lot of evidence has come on record to uphold the above activity of M/s.Satvik Industries, in the form of various statements, machine installed in the factory so as to manufacture such huge quantum of final products, we agree with the learned SDR that the appellant be directed to deposit part of penalty. By taking into consideration the overall the facts and circumstances of the case and charge against them and the fact that the appellant's factory is closed, we direct the appellant to deposit an amount of Rs.30 lakhs (Rupees thirty lakh) towards penalty within eight weeks from the date of pronouncement of the order. The matter to come up ascertaining c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) reversal of credit by issue of invoice when input received in a factory is removed as such without using the input in further manufacture; and (iii) where an invoice is issued debiting the duty payable as per the invoice, either to cover excisable goods or just to create a phony document to enable the person receiving the invoice to take credit. The situation in this case is that mentioned in (iii) above and this is not a situation where no harm is caused to Revenue. 16. There is a further legal issue. When an invoice is issued showing utilization of wrong credit and money is collected from the person to whom the invoice is issued the person issuing invoice is collecting money from his customer representing the amount to be excise duty. Any amount collected by a person from another person as representing excise duty (which had not come to the exchequer at any point of time) has to deposit the amount so collected to the exchequer as per provisions of section 11D of the Central Excise Act. When genuine credit is used the tax element is already deposited by the person who supplied the input. So section 11D gets complied by filing of return. When fraudulent credit is used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on that basis he deposited the excise duty. Once the assessee-respondent has paid the excise duty then he is naturally entitled to avail Cenvat credit. The net result is that there is no prejudice caused to the revenue and the entries have been cancelled by each other. Therefore, we do not find that the aforementioned question is a substantial question of law requiring our determination. The appeal is accordingly dismissed." The facts of this case appears to be similar to that in Vickers System International (supra) where the department accepted the payment of duty on the product but wanted to challenge the credit of duty paid on inputs. At least it is certain that there was no prejudice caused to the Revenue. 18. There are likely to be similar decisions in situations where the question arose whether the process being carried out by an assessee amounted to manufacture. Take the case of an assessee who was drawing copper wires from copper rods. During certain period there was an issue whether the process amounted to manufacture and for that reason credit might have been denied after accepting duty payment on final products. In this situation there could be no case that the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears to be that narrated in item (ii) above. But the proceedings do not invoke provisions of Section 11D of the Central Excise Act, but imposes penalty under Rule 13 of the Cenvat Credit Rules. 22. Since the matter is only at stay stage and a pre-deposit of Rs. 30,00,000/- is called for in the order recorded by Member (Judicial), I do not want to cause further delay in pre-deposit of this amount by differing on the quantum of pre-deposit. So I agree with the operative part of the order recorded by Member (J) in para 10 of the order. In the case of M/s Genius Electricals and Electronics Ltd., I have no view different from what is recorded by Member (J). Mathew John, Member (T) 23. The following orders are made,- (i) M/s Satvik Industries is required to make a deposit of Rs..30 lakhs towards penalty within eight weeks from the date of pronouncement of the order. Subject to pre-deposit of this amount the pre-deposit of balance amount is waived. Compliance is to be reported on 11.5.2012. (ii) The deposit of about Rs. 16 lakhs deposited by M/s Genius Electrical Electronics (P) Ltd, is sufficient for admission of appeal and pre-deposit of balance amount is waived. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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