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TMI Blog2015 (3) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the processors. As such there is nexus between. applicant and manufacturer. The applicant had facilitated the wrong availment of cenvat credit by showing purchase/supply of grey fabrics on his account from the non-existent grey suppliers. Under such circumstances, the applicant was party to said fraudulent availrnent of cenvat credit & then payment of duty fraudulently from such credit, on exported goods. As such, applicant was party to said fraudulent availement of cenvat credit and the transaction between - manufacturer and exporter was not bonafide. Contentions of the applicant that duty was paid on exported goods by issuing invoices under Rule 11 of Central Excise Rules 2002, and foreign remittances towards export sale proceeds were received, do not help them in making them entitled for rebate claim since the said goods were cleared for export by fraudulent payment of duty from wrongly availed cenvat credit as discussed in above para. The said fraudulent payment of duty are only debit entries on paper and no actual duty was paid and applicant was found party to said fraud. - As such, exported goods cannot be treated as duty paid goods: Since-the fundamental-condition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of rebate claim (Rs.) 1 F.No. 195/1453/12-RA US/501/RGD/12 dt. 22.08.12 1864/11-12/DC/Rebate/RGD dt. 23.1.12 1297367 2 F.No. 195/1452/12-RA US/502/RGD/12 dt/ 22.08.12 1842/11-12/DC/Rebate/RGD dt. 19.1.12 1577531 2. Brief facts of the cases are as under: 2.1 Brief facts of case in R.A.No.195/1453/12 (0IA ,No.501 dated 22.8.12). 2.1.1 Deputy Commissioner, Central Excise (Rebate) Raigad rejecting 11 (eleven) rebate claims totally for ₹ 11,30,591/- on the ground that the exported goods were fully exempt under Notification No.30/2004-CE dated 9.7.2004 and in view of sub-section (1) of Section 5A of the Act read with CBEC Circular No.937/27/2010-CX dated 26.11.2011 and did not have the option to pay the duty and could not have paid duty. The applicants claim to have filed 12 (twelve) rebate claims totally for ₹ 12,97,367/-. The adjudicating authority held that one claim for ₹ 1,66,776/- [ARE-I No 153/05-06 dated 02.02.2006] had not been received in the office. He further obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processor in availing such credit is clearly proved; Shri Ritesh Agarwal, Manger and authorised Signatory of M/s Agarwal Textile Mills as well as Director of M/s Swastik Polyprints Ltd. have admitted that only invoices of grey fabrics were received by them without accompaniment of any grey fabrics; the applicant is silent in their reply about the procurement of invoices of grey fabrics and the availment of bogus credit by the processors at the behest of merchant exporter and utilisation of such bogus credit towards payment of duty on goods exported and further observed that any cash transaction cannot be proved by documentary evidence but only by placing reliance on the confessional statements of the person involved in such a transaction. 3. Being aggrieved by the said orders-in-original, the applicant filed appeals before Commissioner (Appeals) who held that processors had claimed cenvat credit and therefore benefit of Notification No.30/04-CE dated 9.7.04 was not available to them as goods were not exempted from duty. However; the appeals were rejected on the ground that applicant merchant exporter was party to fraudulent availment of cenvat credit on the basis of bogus invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d show cause notice was containing those persons who were not in existence and therefore the separate show cause notice was issued for the export made under the said show cause notice. On the contrary DGCEI scanned entire records of the applicant and found that the grey manufacturers were in existent and therefore out of all rebate claims no action was preferred for 12 rebate claims submitted before the rebate sanctioning authority. In view of this, the finding of the lower authorities are not correct on merits and evidences and therefore also the said orders are required to set aside allowing appeal with consequential relief. 4.1.4 The transaction between the processors and the merchant exporters are genuine and at arms' length and nothing adverse have been found or brought on record in the show cause notice or adjudication order in the form of evidences either by the adjudicating authority or by the Commissioner (Appeals) and therefore orders passed by the lower authorities without any corroborative evidences or allegations in the show cause notice are not sustainable in law. 4.1.5 The Judgment cited 15jithe Commissioner (Appeals) are not applicable to the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from the date of lodging claim, the applicant is entitled for interest on completion of the said period while allowing the appeal and the benefit may please be extended in accordance with law. 4.2 Grounds in Revision Application No.195/1452/12 (OIA No.502 dated 22.8.12): 4.2.1 The applicant submits that the lower authorities have erred in not giving proper findings on the submissions made on the point of law and evidences on record and straight away rejecting the: rebate claims on the basis of the allegations made in the show cause notice dated 15.12.2010 and therefore also the entire orders of the lower authorities are not correct in law. 4.2.2 The lower authorities have erred in rejecting rebate claims relying upon the statement of the persons whose cross-examination have not been granted to disprove the allegations and to bring facts on record in the form of oral evidences to corroborate that the grey fabrics were supplied by the respective grey manufacturers etc. and therefore the orders passed by the lower authorities solely relying upon the said statements, is in violation of principles of natural justice. 4.2.3 The lower authorities have erred in not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued for rejection of rebate claims. Accordingly, the adjudicating authority vide order dated 19.01.2012 rejected the 10 rebate claims of ₹ 15,77,531/- and for 3 rebate claims amounting to ₹ 4,31,830/- observed that the said 3 rebate claims were not available in the office of Deputy Commissioner, Raigad and therefore the adjudication proceedings was restricted to the rebate claim files available in the office. Against rejection of the rebate claims, appeal was preferred to Commissioner (Appeals) who also rejected the rebate claims. However, he set aside the penalty imposed. Against the order. of the Commissioner (Appeals), Revision Application have been filed before Revision Authority Delhi which is the subject matter of present proceedings. 4.3.2 It is submitted that after scanning. of the rebate claims by DGCEI, the remaining rebate claims amounting R.5:12,97,367/- were admissible for rebate claims as the grey suppliers were in existent and were not under Alert Circular and therefore the request was made to Deputy-Commissioner (Rebate), Central Excise, Raigad for sanction of rebate claims. However,' the adjudicating authority vide order dated 23.01.2012 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and also in para 4.1.24 Saraswat Industries, Udhna, Surat and Mis. Shree Tirupati Synthetics, Surat. All these show that the scanning of grey suppliers was done and only 3 grey suppliers namely Mis. Shivam Textiles, Mis . Hindustan Garments and Mis. Narayan Silk Mills, Surat were found non-existent for which the show cause notice was issued and confirmed. Since, the DGCEI have scanned our rebate claims and proposed rejection only for the amount of ₹ 20,09,361/-, there was no cause to reject the balance rebate claims. 4.3.5 It is further submitted that under Right to Information Act, Surat-I Commissionerate had provided information vide letter dated 08.02.2012. They have supplied the copy of duty payment certificates in respect of ARE-1 No. 10 dated 27.04.2006, 14 dated 09.05.2006, 15 dated 09.05.2006 19 dated 45.05.2006. It is also submitted that the Deputy Commissioner, Central Excise, Division-V, Surat-I under RTI reply dated 10.02.2012 have stated that duty payment, certificates in respect of export made by KLA Overseas is not traceable in the ;Range Office. Therefore it is not possible to grant inspection of the file or to provide copies of duty payment certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal with consequential relief considering the evidences produced hereinabove in the interest of justice. 5. Personal hearing scheduled in this case on 3.42014 was attended by. Shri K.I.Vyas, advocate on behalf of the applicants who reiterated the grounds of revision application and submissions made in their written letter dated 28.3.14. 6. Government has carefully gone through the relevant case records and oral written submissions and perused the impugned orders-in-original and orders-in-appeal 7. Government observes that in case of. R.A.No.195/1452/12-RA (Order-in-Appeal No.US/502/RGD/12 dated 22.08.12) involving rebate claim of. ₹ 1577531/- the original authority rejected the rebate claim on grounds amongst other grounds that the goods were processed from M/s Agarwal Textile Mills and Mis Swastik Poly Prints Pvt. Ltd. and DGCEI issued a show cause notice to the applicant as well as said two processors for fraudulent availment of cenvat credit by the processor on the strength of bogus/fake invoices of non-existent grey fabric supplier and also that the genuineness of the duty payment on such impugned goods were not available on record. Commissioner (Appeals) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the said five suppliers were non-existent; that the processors availed cenvat credit on the basis of bogus invoices issued in the name of said five bogus suppliers; that the facts of the case clearly proves culpability of the merchant exporter; and that payment of duty from such fraudulently availed cenvat credit cannot be treated as payment of duty for granting rebate under Rule 18 of Central Excise Rules 2002. Adjudicating authority-has recorded in his-findings that in this case applicant had-shown on paper to have procured the grey fabrics from bogus grey suppliers and passed on the fake - cenvat credit by endorsing such fake invoices to the processors. As such there is nexus between. applicant and manufacturer. The applicant had facilitated the wrong availment of cenvat credit by showing purchase/supply of grey fabrics on his account from the non-existent grey suppliers. Under such circumstances, the applicant was party to said fraudulent availrnent of cenvat credit then payment of duty fraudulently from such credit, on exported goods. As such, applicant was party to said fraudulent availement of cenvat credit and the transaction between - manufacturer and exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that insofar as respondent M/s Roman Overseas is concerned, it had purchased goods after payment of duty to the manufacturer. On such duty, respondent M/s Roman Overseas was within its rights to claim cenvat credit which was passed on by the seller of the goods i.e. M/s Unique Exports. It is of course a fact that such goods were not duty paid Fact however, remains that there are no allegations that respondent M/s Roman Overseas was part of any such fraud, had any knowledge of the fact that duty was not paid or t hat it had failed to take any precaution as required under sub-rule(3) of Rule 9 of Cenvat credit Rules which reads as under. 11. in view of above discussion, we find that respondent M/s Roman Overseas cannot be denied the benefit of rebate claims. Particularly, when there are no allegations that respondent M/s Roman Overseas either had knowledge or had even failed to take basic care required in law or in general terms to verify that goods were duty paid. 12. The language of Rule 18 however, may pose some question. In particular, it may be contended that Rule 18 envisages rebate for duty paid. Term duty paid as per the department would be duty pail to the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sheela Dyeing Printing Mills P. Ltd. vs. CCE C, Surat-I reported in 2008 (232) ELT 408 (Guj), wherein issue involved was whether while taking cenvat credit on inputs, the applicant had taken reasonable steps to ensure that goods are duty paid. It was in' this background relying or) sub-rule (2) of Rule 7-of Cenvat Credit Rules;' Court found that applicant had failed to take such care. In the present case, we have already noticed that such averments and allegations are not on record. In fact findings are to the contrary 14. In the result, we are of the view that impugned orders require no interference. 14.1 We may also notice that department has issued notice to the original firms namely M/s Amar Enterprises and M/s Harikrishna Enterprise for recovery of duty and penalty. This would thus show that department is pursuing the original entities for recovery of cenvat credit wrongly claimed whereas on other hand it is denying rebate claim of the manufacturer exporters. We may also notice that against M/s Unique exporters, no proceedings have been initiated, 14.2 We may also record that though counsel for respondent M/s Roman Overseas contended that without cancel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption on exported goods; that Chapter Sub-heading mentioned the CX invoice not tallying with chapter sub-heading declared in the Shipping Bill; that genuineness of Duty payment has not been submitted from the Central Excise Authority indicating the debit entries and verification of input stage credit on the raw material; that Bank Realisation Certificate not submitted in some cases; that Name designation of the Authorised Signatory was not mentioned; that date time of removal of goods not mentioned on the ARE-1; that Date of issue of ARE-1 is different and subsequent to the date of issue of CX invoice and date of removal of goods (i.e. ARE-1's are prepared on subsequent dates); and that one claim No.4282w dated 22.5.07 for ₹ 33339/- was submitted after expiry of one year and so it was time barred; that claim in respect of ARE-1 No.153/05-06 dated 2.2.06 for ₹ 166776/- was not received in the office, that rebate claim No.5650 5648 dated 12.6.07 for ₹ 75048/- and ₹ 122955/- were already decided vide order-in-original No.1842 dated 19.1.12. The appellate authority has discussed each ground of rejection of rebate claim in his order and dropped most of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Poly Prints Ltd. And M/s Agarwal Textile Mills, where goods were supplied by other grey fabric suppliers other than said five suppliers. The adjudicating authority has not brought on record any evidence to state that other suppliers of grey fabrics were also fake or bogus. The instant 12 rebate claims of ₹ 1297367/- do not relate to grey fabrics/exported goods which were procured from 5 bogus suppliers. But these claims pertain to exported goods relating to grey fabrics ,supplied by other grey suppliers, mentioned, which were found genuine suppliers as per-DGCEI investigations. Government finds that in this case since duty- has been paid from valid cenvat credit and therefore, the ratio of Hon'ble Bombay High Court's order dated 27.06.2011 in W.P. 3956/10 reported as 2011 (274) ELT 5Q1(BOM) in case of M/s Rainbow Silk wherein the claimant was also .a party to fraud cannot be made applicable to this case. In view of above position, Government noes that in tete cases duty was paid on exported goods from the valid cenvat credit-and lower authorities have erred in giving an erroneous finding of treating the cenvat credit availed in these cases as wrong credit without any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. Government therefore directs the original authority to consider the said claim as stated in para 9.3 for sanction after getting the duty payment particulars verified by the jurisdictional range superintendent. The range superintendent will be required to submit his report on fresh verification of duty payment particulars from his records within one month of the receipt of communication from the original authority. 10. In view of above discussions, Government finds no infirmity in order-in-appeal No.US/502/RGD/12 dated 22.8.12 and upholds the same. The Revision Application No.195/1452/12-RA is therefore rejected being devoid of merits. Further, Government modifies the Order-in-Appeal No.US/501/RGD/12 dated 22.08.2012 to the above extent discussed in para (9) and allows the Revision Application No.195/1453/12-RA partially. The applicant is directed to submit all the relevant documents relating to payment of duty before original authority within a week's time of this receipt of this order. The original authority will consider the said claims for sanction expeditiously in accordance with law, provided the duty payment on export goods was on verification found in order. 11. ..... 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