9911796707
TMI Blog2024 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased from the suppliers of the grey fabrics were not the same goods on which the CENVAT Credit was reversed later on by the processors. In case of Diwan Brothers [ 2014 (9) TMI 147 - GUJARAT HIGH COURT ], this Court did not grant the benefit of rebate on export on the ground that it was not proved that the supplier of the goods paid the duty on the very goods which came to be supplied and accordingly, held ' Under the circumstances, unless and until the same is established the case of the petitioner cannot be considered. In the present case as such it is found that the transactions between the petitioner and its supplier (M/s. Universal Textiles) were found to be fake. Even otherwise it is required to be noted that as such it is pointed out that M/s. Mamta Silk Mills Pvt. Ltd. has demanded the refund of the said duty in view of the subsequent proceedings initiated by it. Under the circumstances, on the aforesaid ground, the petitioner shall not be entitled to the rebate claim.' Thus, no interference is called for in the impugned order passed by the Revisional Authority - petition dismissed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. After considering the submissions and providing opportunity of hearing, the order-in-original was passed recording the following outcome of investigation : 13. OUTCOME OF INVESTIGATIONS: 13.1 Outcome of investigations in respect of polyester grey fabrics manufacturers: M/s G Tex has shown purchase of polyester grey fabrics from M/s Surbhi Corporation and M/s Kesar Textile both located at Malegaon and M/s Parth Impex, M/s Shivam Textile, M/s Balaji Textile M/s Suryanaraayn Textiles, M/s Narayan Silk Mills M/s Deepak Processors all located at Surat. However, in the light of the evidences unearthed during the investigations conducted by the DGCEI, it appears that the transactions between the aforesaid grey manufacturers/dealer and M/s G Tex were only paper transactions without any physical sale or purchase of grey fabrics. All of them had issued only duty paid invoices of grey fabrics without actual manufacture and supply of the same. Mis Jagdamba Dyeing Printing Mills M/s Ramanuj Dyeing Printing Mills which are the processors of the grey fabrics purchased by M/s G Tex had fraudulently availed cenvat credit and passed on the same to M/s G Tex so as to encash rebates. It appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigations as discussed earlier, it appears that both these transporters never ever existed. The lorry receipts which are shown to be used to carry consignment of the grey fabrics from Malegaon to Surat appear to have been got printed and prepared in name of above transporters by Shri Brijesh Shah, proprietor of M/s Parth. In the view of all these findings, it appears that no grey fabrics were transported from Malegaon to Surat. 13.3 Outcome of investigations in respect of financial transactions: In the view of the investigations carried out, it appears that no real financial transactions took place during the course of purchase and sale of grey fabrics by M/s. Parth Impex. The customers of M/s. Parth i.e. exporters or processors used to issue cheques payable to Mis. Parth which were being deposited in to the various accounts of M/s. Parth. Thereafter, in order to show payments to its suppliers. M/s. Parth was getting acknowledgments of cheques being issued to them which were actually the blank cheques signed by M/s. Parth, which were subsequently handed over to the exporters or processors, who have issued cheques in its favour. Thereafter, the exporters used to get the cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... central excise duty on the processed fabrics is shown to be paid out of the wrongly availed cenvat credit on the mere invoices of M/s Surbhi Corporation, M/s Kesar Textile, M/s. Parth Impex, M/s Suryanarayan Textile, M/s Balaji Textile M/s Shivam Textile without actual receipts and consumption of the inputs. Thus it appears that availment of the cenvat credit and subsequent utilization by the processor was merely a paper transaction without actual manufacture and supply of the processed fabrics. Further it is also revealed that no central excise duty is actually being paid on the central excise invoices issued by processors as duty is shown to be paid out of the fraudulently availed cenvat credit. Thus it is evident that the processors have assisted and enabled the merchant exporter to claim the rebate of the central excise duty which was never paid. 13.5 Outcome of investigations at M/s Deepak: In the light of the investigations it appears that M/s Deepak had availed CENVAT Credit on the duty paying documents supplied to them by aforementioned grey fabric manufactures. It was further revealed that M/s Deepak never existed in the address declared by them. On being shown various evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly claimed the rebate of duty shown to be paid on exported goods which actually was never paid to the exchequer at any stage. 13.6.2 In the view of investigations discussed in aforesaid paras, it appears that a unique modus operandi with sole intention to avail fraudulent rebate of Central Excise duty which was never paid to the exchequer was created and adopted by the exporter of polyester fabrics, units/persons posing as grey fabric manufacturers and the processors. They created long chain of bogus firms carrying out different activities involved in manufacture of dyed/printed/processed fabrics all of which were registered with Central Excise for payment of Central Excise duty and availing CENVAT Credit. M/s.Parth, M/s Surbhi, M/s Kesar Textile, M/s Balaji Textile, M/s Shivam Textile, M/s Suryanarayan Textile and M/s Narayan Silk Mills all registered dealer/manufacturers of grey fabrics issued only the duty paid invoices without actual manufacture and supply of grey fabrics to M/s. G Tex, Merchant Exporter. M/s. G Tex sent aforesaid invoices to the processors viz. M/s Ramanuj Dyeing Printing Mills M/s Jagdamba Dyeing Printing Mills, who fraudulently availed CENVAT Credit on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d supplied any grey fabrics to the processors (through M/s. G. Tex) and the processors had availed cenvat credit wrongly without receiving the fabrics only on the basis of invoices of such manufacturers of grey fabrics, are sustainable in the instant case, the rebate of central excise duty shown to have been paid on the processed fabrics cannot be denied when their export is not under dispute The exported goods had ultimately suffered the central excise duty. As per procedure laid down for export under claim of rebate of Central Excise duty vide the notification issued under Rule 18 of Central Excise Rules, 2002, the jurisdictional Central Excise authorities had to verify the particulars of duty paid or duty payable and had to endorse its correctness or otherwise From the sample copies of the OIOs vide which their rebate claims had already been sanctioned produced by M/s. G. Tex, I find it clear that the same were sanctioned on the basis of verification reports received from concerned range officers who had clearly reported that the rebate claim is admissible, duty has also been paid on goods cleared for export under above ARE-1, no Gout dues is pending against the claimant etc. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices indicating duty payment particulars showing all other details. Even if said duty was shown to be paid from the wrongly availed cenvat credit on the strength of invoices issued by non-existent suppliers by the processors, the legal provisions exist in the Central Excise Act, 1944 and Cenvat Credit Rules, 2004 for recovery of such alleged wrongly availed credit from the processors along with interest and penalty, which has been done in the instant case. So, when the recovery proceedings has already been initiated against the processors for cenvat credit wrongly availed by them under the provisions of Cenvat Credit Rules read with Central Excise Act, 1944, the exporter (M/s. G. Tex) cannot be denied the legitimate benefit of rebate of amount of duty paid (shown to be paid) by the processors as the exporter had paid the transaction amounts to the processors inclusive duty and also there is no mutuality of interest and/or financial control/flow-back of money between the exporter and processors. I do not find any violation of Rule 18 of Central Excise Rules, 2002 read with any notification issued there under. Following the above order in M/s. Shyam International, the Revisionary Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly availed duty credit and there is no charge of mutuality of interest, financial control, flow back of money funds and non-bona fide nature of transactions between the petitioners and the processors. It was, therefore, submitted that under such circumstances, the rebate of duty cannot be denied to the petitioners even if the processors had availed Cenvat credit wrongly on the basis of bogus purchase invoices as held by the Adjudicating Authority. 4.2 Learned advocate Mr. Shah, in support of his submissions, relied upon the decisions of this Court in case of Commissioner of Central Excise Customs v. D.P. Singh, reported in 2011 (270) ELT 321 (Guj.) and Diwan Brothers v. Union of India, reported in 2014 (309) ELT 244 (Guj.). Relying upon both the decisions, it was submitted that the petitioners are entitled to the rebate on the export made by it as well as the penalty which is confirmed by the Revisional Authority is required to be quashed and set aside. It was pointed out that during the course of investigation, none of the suppliers of raw materials has named the petitioners and only because the suppliers have issued the invoices without payment of central excise duty, it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implicates the petitioners for the fraud which was detected during the course of the investigation for supply of the grey fabrics without there being any existent manufacturers and only paper invoices were issued without payment of excise duty. It is also revealed during the findings recorded by the Revisional Authority to the effect that the goods which were even provided to the processors by the petitioners which was purchased from the suppliers of the grey fabrics were not the same goods on which the CENVAT Credit was reversed later on by the processors. The findings arrived at by the Revisional Authority are as under. 10. Government finds that the Show Cause Notice dated 27.05.2010 sought to recover the rebate already sanctioned to M/s GTEX as well as reject their claims which were pending disposal. Government finds that the events which led to the above Show Cause Notice are based on an investigation carried out by the DGCEI, Ahmedabad, wherein it exposed a syndicate consisting of several entities who issued fake/bogus Central Excise Invoices indicating payment of duty without any physical sale or purchase of grey fabrics or actual payment of Central Excise duty. The facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd downstream suppliers of grey fabrics were investigated together was the conspiracy exposed. These bogus dealers/manufacturers issued Central Excise invoices indicating payment of Central Excise duty on grey fabrics to several other firms as well as amongst themselves, without actual supply of goods or payment of duty in the first place. These invoices were used either by Dealers' or the 'Processors' to avail or pass on Cenvat credit. The Cenvat Credit so availed was used to pay duty when the goods were indicated as sold to a processor/exporter. The role of the all the firms/persons involved, including those who preferred appeals before the Commissioner (Appeals) who have been mentioned above, has been laid bare by the investigation carried out. Government notes that M/s GTEX had, in the capacity of a merchant exporter, indicated purchases from such Dealers/manufacturers' who issued such fake/bogus invoices without supply of grey fabrics or payment of duty. Investigation carried out revealed that the job-workers/processors of M/s GTEX had availed Cenvat credit on the strength of such fake/bogus Central Excise invoices issued by the said Dealers and manufacturers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by it. On being confronted with the evidence collected during investigation, the partner of the merchant exporter had admitted that such grey manufacturers could not have existed and hence could not have manufactured any grey fabrics. Further, Government finds that the partners of the job worker/processors, viz. M/s JDPM and M/s RDPM and also the partner of M/s GTEX have in their statements before the Central Excise authorities, when confronted with the statements and other evidence collected during the investigation, have admitted that the firms who supplied grey fabrics, could not have paid Central Excise duty on the grey fabrics purportedly supplied to them. Government notes that M/s GTEX had claimed rebate of the duty paid by their job workers/processors on the final products alleged to have been manufactured out of such non-duty paid grey fabrics. Government finds that the proprietors of M/s ST and M/s NSM have in their statements recorded before the officers, admitted that they had not purchased any yarn and had availed Cenvat credit of yarn on the basis of forged invoices, they further admitted that never manufactured or supplied grey fabrics at any point of time. 14. Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were granted Central Excise registration, M/s GTEX would be eligible to the rebate claimed by them. As stated above, Government finds that it was only after a comprehensive investigation was carried against the whole syndicate, did the fraud perpetuated at multiple levels stood exposed. Government finds that it would be impossible for a Range officer to detect that the finished goods placed before him for export were manufactured out t of grey fabrics which had not suffered Central Excise duty in the normal course. Further, Government notes that it would be near impossible for an officer to predict while granting Central Excise registration to the grey fabrics dealers/manufacturers that the same was being obtained for the purpose of perpetuating such fraud. Government finds that it is only with the benefit of details thrown up by the investigation conducted across the entire group of firms involved in the conspiracy was the fraud exposed and it would be near impossible to detect the same when the exposure of an officer is limited to one firm. Thus, Government finds that the grounds on which the Commissioner (Appeals) held that M/s GTEX will be eligible for the rebate claimed, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
