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TMI Blog2023 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ere accompanied by the documents. Perusal of the impugned order in light of the show cause notice would indicate that the facts of the case on hand were identical to the case of appeals before the Division Bench in case of Prayagraj Dyeing Printing Mills Pvt. Ltd. [ 2013 (5) TMI 705 - GUJARAT HIGH COURT] and therefore, it was not open for the respondent authority not to give the benefit of such judgement. Petition allowed. - HONOURABLE MR. JUSTICE BIREN VAISHNAV AND HONOURABLE MR. JUSTICE DEVAN M. DESAI Appearance: For The Petitioner : Mr. S S Iyer (6553) (S) No. 1,2 For The Respondent No. 3,4 For The Respondent Notice Unserved No. 1,2 For The Respondent(S) : Priyank P Lodha(7852) No. 3,4 CAV JUDGMENT (PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) 1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed to set aside the order dated 22.07.2021 passed by the respondent no. 4 herein Joint Commissioner of GST and Excise, Surat. 2. Facts in brief are that the petitioner is an individual processor of grey fabrics. It is engaged in the processing of man-made fabrics falling under Chapter 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Mills Pvt. Ltd. (supra) and the submissions of the Revenue in the facts of the present case are identical and so also the allegations in the show cause notice. He would therefore submit that the Adjudicating Authority committed an error by alleging fraud by the petitioners. 3.4 Mr. Iyer would rely on paragraph nos. 11 to 13 of the judgement in case of Prayagraj Dyeing Printing Mills Pvt. Ltd. (supra). He would also rely on the following decisions: (I) Raza Textiles Ltd v. Income Tax Officer reported in (1973) 1 SCC 633 : (AIR 1973 SC 1362) (II) Commissioner of Customs, Mumbai v. Toyo Engineering India Limited; (2006) 7 SCC 592 (III) Kalpataru Power Transmission Ltd. v. State of Maharashtra and others; 2023 SCC OnLine Bom 1595 4. Mr. Priyank Lodha learned Senior Standing Counsel appearing for the department would make the following submissions: 4.1 That the petition under Article 226 of the Constitution of India is not maintainable. The petitioner has directly approached this Court challenging the order-in-original and there is an efficacious alternative remedy of filing an appeal against the order. The petition therefore should not be entertaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit. 5.1 Perusal of the impugned order of the authority indicates that the only basis of passing the order confirming the demand of CENVAT credit of Rs. 15,40,481/- is that the suppliers of grey fabric were though professed to be in existence, such suppliers were bogus. The onus to prove otherwise was shifted on the petitioner, which according to the department, the petitioner could not discharge. The other ground on which the department did not think it fit to extend the same benefit as was given in the case of Prayagraj Dyeing Printing Mills Pvt. Ltd. (supra) is that the petitioner has never challenged the alert circulars issued by the department. 5.2 Perusal of the impugned order indicates that in the case of Prayagraj Dyeing Printing Mills Pvt. Ltd.(supra), as per the department, the Court had opined that once receipt of goods is not disputed by a person taking credit and necessary invoices are issued, he is entitled to take credit provided that he took reasonable steps to ensure that the inputs / capital goods in respect of which he had taken CENVAT credit are the goods on which appropriate duties of excise as indicated in the document accompanying the goods have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues therefore, the Court in paragraph nos. 6 to 11 held as under: 6. After hearing the learned counsel for the parties and after going through the materials on record, we find that the Central Excise Commissionerate, Surat-I, addressed a communication to M/s. Prayagraj Dyeing Printing Mills Pvt. Ltd., inter alia, intimating that during the verification of Cenvat documents, it revealed that M/s. Prayagraj Dyeing Printing Mills Pvt. Ltd., had availed cenvat credit on the strength of the invoices issued by M/s. Sana Textiles. In the inquiry conducted by the department, it was established that such Unit did not exist or ever existed and the documents purportedly produced were fake since the supplier of the goods itself was non-existent. Thus, according to the Revenue, a bogus document could not be considered as valid document for the purpose of availment of cenvat credit and, therefore, the credit so availed was incorrectly received and it was intimated to reverse the same along with interest under the intimation to the office of the Superintendent of Central Excise Customs, Range-II, Division-II, Surat-I. 7. As indicated earlier, the matter went upto the level of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is entitled to take credit provided however that he took reasonable steps to ensure that the inputs or the capital goods in respect of which he had taken CENVAT credit are the goods on which appropriate duty of excise as indicated in the documents accompanying the goods, has been paid. 10. In this connection, we find substance in the contention of Mr. Parikh, the learned senior advocate appearing on behalf of the appellants, that there is a marked distinction between a forged document and a document issued by practicing fraud. If it appears that a document is a forged one or a manufactured one, it is concocted or a created one in the eye of law and it is in the eye of law a non-existent document. On the other hand, a document issued in the context of a fraud or misrepresentation, is by itself a genuine document and according to settled law, such document is, at the most, voidable and is valid till it is set aside. A transaction that takes place on the basis of such document is good one and can even give a good title to the holder in due course for valuable consideration. At this juncture, we may profitably refer to the observations of the Supreme Court made in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now not traceable, is sufficient for reversal of cenvat credit already taken by the appellants by virtue of the original invoices. However, at the same time, we find substance in the contention of Mr. Oza and Mr. Champaneri, the learned counsel appearing on behalf of the Revenue, that in order to get the credit of CENVAT, Rule 7(2) cast a further duty upon the appellants to take all reasonable steps to ensure that the inputs or the capital goods in respect of which the Appellants had taken the credit of CENVAT are the goods on which appropriate duty of excise as indicated in the documents accompanying the goods, has been paid. The Explanation added to Rule 7(2) even describes the instances which are the reasonable steps. The Appellants in these cases, however, not having taken those steps, cannot get the benefit of the credit even though he is not party to fraud. In this connection, we fully agree with the views taken in the case of Sheila Dying (supra), and hold that the said decision supports the case of the Revenue and taking of all reasonable steps as provided in Rule 7(2) is an essential condition of availing the credit. The distinction sought to be made by Mr. Parikh that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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