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TMI Blog2011 (9) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in the manufacture and sale of ATM Machines and its parts. The premises of the assessee was inspected by the officials of the Central Excise Department on 4 December, 2009. During the course of inspection it was found that credit was taken twice without receipt of goods mentioned in the respective invoices. The inspection further revealed that the assessee had availed credit of duty on two occasions against a single document and this made the department to initiate proceedings against the assessee. The records were forwarded to the Central Board of Excise and Customs by the Chief Commissioner of Central Excise, Chennai. 3. The Central Board of Excise and Customs was of the view that the assessee committed serious misconduct in avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of conduct adopted by the assessee clearly shows that the attempt was to take credit twice and for the said purpose they have illegally splitted the amount into 415 entries and in that manner wrongly availed credit. Therefore, it was a deliberate case of availing the benefit twice and as such mens rea is writ large. Analysis: 7. The substantial contention raised by the assessee pertains to absence of materials indicating mens rea within the meaning of Notification No.32/2006-C.E. (N.T.) dated 30 December, 2006. In short, it was the contention of the assessee that element of mens rea should be proved by the department before withdrawing the facilities and imposing restrictions. 8. The core issue is as to whether the revenue wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to follow the provisions of the beneficial notification in its letter and spirit. In case on the basis of materials a prima facie case is made out about the involvement of a particular manufacturer or exporter, in a fraudulent transaction it would give a cause of action to the Revenue for taking deterrent measures. The Authorities who were instrumental in giving concessions were equally entitled to withdraw the same or to take action in case of proved violation. The notification dated 30 December 2006 indicates that in order to take action for violation, the authority has to be satisfied prima facie. The materials collected by the prescribed authority must prima facie prove involvement of the assessee and their knowledge, in the fraudul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion or inference about the nature of the thing. These two requirements i.e. knowledge and reason to believe have to be deduced from various circumstances in the case. 14. The Supreme Court in Basdev v. State of Pepsu, 1956 SC 488 = 1956 SCR 363, observed that in many cases intention and knowledge merge into each other and in fact, knowledge is an awareness of the consequences of the act. The Supreme Court said: Motive is something which prompts a man to form an intention and knowledge is an awareness of the consequences of the act. In many cases intention and knowledge merge into each other and mean the same thing more or less and intention can be presumed from knowledge. The demarcating line between knowledge and intention is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are sufficient materials to form a reasonable belief that a person has knowingly committed the offence as specified in paragraph 1 of the notification, he has to forward the recommendation to the Board. The person against whom action is proposed would be given an opportunity to submit his version. Therefore, the notification contains an in-built procedure to collect materials and to take action, with an opportunity of hearing to the concerned. 17. The evidence collected by the Department of Central Excise were sufficient to take action against the appellant. The appellant sought to explain the incident as a bona fide mistake on the part of their employees. The appellant in their explanation put forward a case that employees responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to split the entire CENVAT credit into 415 entries in spite of taking the entire credit on a single entry on 29 November 2008 shows nothing but mens rea. Nothing more is necessary to prove the element of mens rea. The defence that the appellant was having a credit balance of ₹ 20 crores at any given point of time also would not come to their rescue in view of their deliberate attempt to split the single entry into 415 entries and taking the credit once again. Conclusion: 21. The materials produced by the revenue clearly show that the assessee was instrumental in taking the credit for the second time with full knowledge. Therefore, it cannot be said that there were no materials before the revenue to take deterrent action aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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