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TMI Blog2019 (6) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the invoices were received from 22 firms were found to be non-existent, which came to notice of the department only after investigation and this cannot be a mere co-incidence. This means that it was modus operandi for passing and receiving fraudulent credit by issuing invoices to cause massive loss to the exchequer. The Appellant did not fulfill the obligation cast upon them and the fraud came to the knowledge only after investigation which means that the situation of passing of and availing fraudulent credit was so grave that it led to issue of number of Alert Circulars by the department. Appeal dismissed - decided against appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the dealer was found to be existent. All the firms were found to be non-existent and same cannot be a coincidence. The assessee has not taken reasonable steps required under Rules and thus enabled the fraud to succeed. The Appellant themselves concede that they do not know the firms personally and that the fabrics were supplied by the merchant manufacturer in full quantity on endorsement basis. It was the obligation cast upon the person availing credit under Rule 7 of the Cenvat Credit Rules to personally satisfy himself about the genuineness of the documents on the basis of which they intend to take credit. On the ground that they have not acquired the good directly from the perpetrators of fraud in no way diminishes or dilutes their legal responsibility of satisfying themselves that the credit being availed was legitimate since the obligation cast on them does not stop at the point of satisfying themselves about the genuineness of the merchant manufacturer but goes right upto the persons issuing the documents. It was verified by the officers in presence of independent panchas that these firms did not exist at the declared premises at all and hence it was not possible for thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Sheela Dyeing & Printing Mills P. Ltd 2008 (232) ELT 408 (GUJ), the Hon'ble High Court while upholding the Tribunal order held as under : "The appellant-assessee has proposed the following two questions : (a) Whether the Tribunal was right in holding that the Appellants failed to take reasonable steps of Rule 7(2) when admittedly the Appellants received goods from principal supplier on job work basis and principal supplier purchased goods from the said Vendor? (b) Whether Appellants are liable for amount of duty in a case where goods were purchased by the principal Supplier and not by the Appellants? 2. The facts in brief are that the appellant-assessee, at the relevant time, was engaged in manufacturing processed fabrics on job work basis. During the course of its business, in June 2003, the appellant had undertaken job work from one M/s. Jhanwar International (the principal manufacturer) for processing fabrics. The appellant received grey fabrics for processing, under challans issued by the principal manufacturer and invoices issued by M/s. Muskan Prints who had sold the grey fabrics to the principal manufacturer and consigned the goods to the appellant. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the appellant has taken reasonable steps to satisfy itself about the identity of the supplier as envisaged under the said rule. It was pointed out that the appellant had procured stock declaration filed by M/s. Muskan Prints stating that as on 31-3-2003 the goods were available at the factory of Muskan Prints. As per the declaration, M/s. Muskan Prints was entitled to avail the deemed credit on the basis of declaration of stock. The appellant had also obtained an undertaking of the principal manufacturer for payment of CENVAT credit in case of any dispute in future. It was accordingly submitted that in the circumstances the provisions of sub-rule (2) of Rule 7 had been substantially complied with, hence the appellant ought not to have been held liable for payment of duty and interest. 6. The only issue involved is as to whether the appellant who has taken CENVAT credit on the inputs has taken reasonable steps to ensure that the inputs in respect of which CENVAT credit has been taken, are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods has been paid as envisaged under sub-rule (2) of Rule 7 of the Rules. 7. The Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the appellant manufacturer. On the first issue, it has been held that the credit was not available. As regards the second issue, though the conduct of the appellant manufacturer was found to be suspicious but still the benefit of doubt was given holding that the appellant did not have knowledge or intention in wrongly availing the Cenvat credit. In the light of the overall evidence and taking the entire facts and circumstances of the case, it has been categorically held that the invoices raised by M/s. Muskan Prints based on which the appellant manufacturer had taken credit is not valid for the purpose of taking credit by the appellant. It was also directed that the appellant was required to pay duty and interest as demanded by the original authority and confirmed by the appellate authority. Granting benefit of doubt the appellant might not be in collusion with the non-existing Muskan Prints, the penalty was totally set aside. I do not find any mistake apparent on the record of the case. Further the order passed by the Tribunal was an appealable order. In the light of the above, I do not find any merits in the application for rectification of mistake. The application is rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that at the relevant time the goods were available at their factory and that Muskan Prints was entitled to avail the deemed credit on the basis of declaration of stock. The appellant also obtained an undertaking from the principal manufacturer for payment of CENVAT credit in case of any dispute in future. 12. Examining the steps taken by the appellant in the light of the aforesaid statutory provisions, it is apparent that the steps taken by the appellant do not fall within any of the three categories enumerated under the Explanation to Rule 7(2) of the Rules, viz. the appellant undoubtedly has not satisfied itself about the identity and address of the supplier either from its personal knowledge, or on the strength of a certificate given by a person whose handwriting or signature it is familiar with, or on the strength of the certificate issued to the supplier by the Superintendent of Central Excise as envisaged under the said provision. It is, therefore, not possible to state that the appellant has fulfilled the requirements of sub-rule (2) of Rule 7 of the Rules. 13. In the aforesaid set of facts and circumstances, it cannot be said that there is any infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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