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TMI Blog2012 (7) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... falling under Chapter 29 of the first schedule to the Central Excise Tariff Act, 1985 and are registered with the Central Excise Department. The respondent had taken Cenvat Credit of ₹ 3.86 Lakhs on the basis of invoices of capital goods issued by registered dealer M/s Nerka Chemicals Pvt. Ltd., passing on credit of duty have been paid by M/s N.H.Harsora Pvt. Ltd. who was the manufacturer of said capital goods. On scrutiny of the documents seized from the premises of M/s N.H. Harsora and M/s. Nerka Chemicals Pvt. Ltd, it was found that there was clearances of 13 SS Reactor/Vessols/Tanks etc. to M/s Nerka Chemicals Pvt. Ltd. valued at ₹ 48,25,000/- and duty paid was shown to be of ₹ 7,72,000/- and sales tax of ₹ 4,47,760/-. The said 13 invoices issued by M/s N.H.Harsora were fabricated invoices and no duty has been paid on the said clearances. That M/s Nerka had cleared these goods to the respondent amounting to ₹ 2.08 crores plus duty of ₹ 7.72 lakhs and the respondent had availed Cenvat Credit of ₹ 7.72 lakhs. It is the case of the department that in terms of Rule 12 and 13 of Cenvat Credit Rules, 2002/ Rule 14 & 15 of Cenvat Credit Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, were one of using fake invoices and on that basis securing the benefit of Cenvat Credit. It was revealed from intelligence inquiry that the respondent had purchased finished goods from one M/s N.H.H. and in which transaction the said manufacture had evaded the central excise duty by selling the goods at under valued prices. The sales were made through registered dealer M/s Nareka Chemicals Ltd. Vapi. The premises of the petitioner, said M/s NHH as well as that of the dealer M/s Nareka Chemicals were searched in presence of independent punch witness and the statement of the responsible persons handling the affairs of the said parties were recorded. In light of the above investigation, the show cause notice inter alia mentioned the following facts calling for the explanation of the assessee on the said aspects. "5.2 M/s Nerka being a registered dealer had availed Cenvat credit on these invoices. Further as per the stock registers/invoices of M/s Nerka these goods have been sold by them to M/s Transpek Industry Ltd., Vadodara vide invoice Nos.1 to 6 all dated 27.12.2003 and invoice No. 7 to 13 dated 28.12.2003. The total value of these goods as per the invoices of M/s Nerka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sora Pvt. Ltd. and the rest of the amount i.e. ₹ 1.55 had been routed to M/s. United Phosphorous Ltd. through M/s Nerka Chemicals Pvt. Ltd. and others. M/s Nerka as a dealer had made only this transaction only. From the above it seems that this company (dealer) was floated for the particular work contract of M/s Transpek only. It seems to be a result of preplanned conspiracy of M/s. N.H. Harsora Pvt. Ltd., M/s Nerka Chemicals Pvt. Ltd., M/s United Phosphorous Lts. and M/s. Transpek Industries Ltd. as per which M/s. Transpek needed capital goods at inflated prices and M/s N.H. Harsora supplied goods to M/s Nerka Chemicals Pvt. Ltd. (dealer) who in turn inflated the prices of the capital goods many times. The full transaction was funded by M/s. United Phosphorous Ltd. only and the inflated amount finally routed to them only. By doing so M/s. Transpek was able to show the inflated price of the capital goods in its fixed assets accounts. Without prejudice to this show cause notice a separate notice will be issued to M/s. N.H.Harsora Pvt.Ltd., Vapi for demand of duty on the illicit clearances made on the strength of fake invoices issued to M/s. Nerka Chemicals Pvt. Ltd., Vapi on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 15 of Cenvat Credit Rules, 2002/2004 read with Section 11AC of Central Excise Act, 1944. 4.4 The order of the adjudicating authority was upheld by the Commissioner (Appeals). The assessee approached the Tribunal. The Tribunal allowed the appeal in favour of the assessee by accepting that the goods were supplied by the registered dealer to the assessee and therefore the assessee could not be expected to go beyond and examined whether the dealer had availed credit or not and whether the manufacturer had discharged his duty liability or not. The Tribunal on such reasoning held that benefit of Cenvat Credit cannot be denied to the assessee by observing as under. "In a situation like above, the remedy for the Revenue lies in initiating proceedings against the manufacturer, who had cleared the goods under the cover of fake central excise invoices without payment of duty. In any case, it stands contended before me that the original manufacturer has subsequently paid the duty, in which case the benefit of credit cannot be denied to the appellant and penalty cannot be imposed upon him. In view of the above, I set aside the impugned order and allow the appeal with consequential re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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