Custom, Excise & Service Tax Tribunal
C.C.E. Noida vs M/S. R.S. Industries on 11 March, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, WEST BLOCK-2, R.K. PURAM NEW DELHI
SINGLE MEMBER BENCH
Excise Appeal No. E/3385/2010EX(SM)
[Arising out of Order-in-Appeal No.224/CE/Appl./NOIDA/2010 dated 29/7/2010 passed by the Commissioner (Appeals) Central Excise, NOIDA.
For approval and signature:
Honble Mr. Manmohan Singh, Technical Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
C.C.E. NOIDA Appellants
Vs.
M/s. R.S. Industries Respondent
Appearance:
Shri M.S. Negi, for the Appellants None for the Respondent CORAM:
Hon'ble Mr. Manmohan Singh, Member (Technical) Date of Hearing:28.10.2013 Date of Pronouncement: 11.03.2014 FINAL ORDER NO.50952/2014 Per Manmohan Singh The Revenue has come in the appeal against the Order-in-Appeal No.224/CE/Appl./NOIDA/2010 dated 29/7/2010 passed by the Commissioner (Appeals) against the Order-in-Original No.20/AC/N-I/09-10 dated 15/3/2010 in case of M/s R.S. Industries, Noida. Commissioner (Appeals) rejected on departmental appeal regarding non-demand of interest and inadmissible credit. Revenue contended that it was recoverable from the party under Rule 14 of Cenvat credit Rules 2004 as the inadmissible Cenvat Credit has been taken by M/s R.S. Industries. Revenue also pointed that it has clearly been proved through investigations that M/s R.S. Industries availed Cenvat Credit on the invoices issued by registered dealer on the strength of bogus invoices issued by first stage dealer namely M/s Rishav Trading Company, Ghaziabad.
2. Heard the ld. DR. However none was present from the respondent side. Appeal was examined with the assistance of learned DR.
3. Records containing Order-in-Original, Commissioner (Appeals) order as well as grounds of appeal preferred by Revenue before the Tribunal were examined. It comes out that M/s R.S. Industries, B-59, Sector-2, Noida were engaged in the manufature of automobile parts and availing cenvat credit on inputs namely C.R. Sheets have availed irregular Cenvat Credit on the strength of the invoices issued by Registered Dealer in their name wherein the goods were shown to have been manufactured by M/s Pasondia Steel Profile Ltd., 28th Km. stone, Delhi Merrut Road Ghaziabad (hereinafter referred to *PSPL). Investigations proved that no manufacturing activity took place in PSPL from Dec03 to Dec05.
4. The fact of closure of production has been proved from the statement dated 19.6.2006 of Shri Upendra Goel, Director of PSPL given before the SIO, DGCEI, New Delhi,wherein he himself admitted that :
(a) their electricity connection had been disconnected on 30.11.02.
(b) since they had MOU with SAIL for lifting 54000 MT HR Coils but did not have the resources and capability to lift or process the same, they sold the same to various dealers who lifted the material directly from SAIL, and sold the same at a premium in the open market.
(c) Since they (PSPL) had the Cenvatable bills from SAIL, they used to show production and were selling the bills without material to various parties on commission basis.
(d) They were contacted by some parties (dealers) namely M/s Ankur Steels, Ghaziabad, Rishav Trading Co., Ghaziabad, Gurukrupa Trading Co. Ghaziabad, Vishal Iron Works, Ghaziabad, Prashant Industrial Corp, Ghaziabad for supply of Cenvatable invoices without material.
5. The payments were made by the above said dealers to PSPL in cash, and also the pay orders for payment of SAIL were prepared by the said dealers. Thus they (PSPL) were only providing accommodation entries in their books and the entire transactions were being done by the dealers in cash through their account.
6. It has also been admitted by Shri Amarjeet Singh, Transporter, Shri Jitender Kumar, Accounts Officer of M/s Jain Cutters (Jain Iron & Steel Industry) B-22/02, BSR Indl., Area, Ghaziabad, Shri Rajeev Agarwal Accountant, M/s Saaras (Cutters) India Pvt. Ltd., Ghaziabad in their statements recorded U/s 14 of the Central Excise Act, 1944 that PSPL did not lift the HR Coils from SAIL, nor sent the HR Coils for cutting on their own but the same were received for cutting by the above named cutters through M/s DV Steel (Mr. Sharad), M/s SP Sales and M/s Mittal Steel (Shri Arvind Mittal), all of Navyug Market Ghaziabad and that as per their knowledge the HR Coils after cutting went in the open market through these persons.
7. Shri Manoj Jain, Properitor of M/s Rishav Trading Co., Navyug Market, Ghaziabad, the trader upon whom penalty was imposed by the adjudicating authority, on being confronted with the statement dated 19.06.06 of Shri Upendra Goel, Director of M/s Pasondia Steels and profiles Ltd., Ghaziabad, Sh. Jain in his statement dated 17.04.2009 confirmed the correctness of the same and stated that the goods shown as purchased under the bills of M/s Pasondia steel (CR Strip and CR Sheet) were actually purchased from the market through brokers and such procured goods were shown as manufactured by M/s Pasondia in the invoices issued by him. He further stated that there was no direct dealing with M/s Pasondia and all payments were made by cheques through the brokers.
8. In view of above, it is observed that the issue for consideration is merely whether by any stretch of imagination, it could be held that goods and quantities recovered in the factory could be considered duly procured and having duty paying nature once investigations revealed the goods shown in the invoices were not supplied by M/s Pansodia and also in view of over whelming evidences that goods were purchased from the open market and supplied to various buyers/dealers.
9. It is evident that fraud has been committed and fake invoices have been issued enabling dealers/buyers to take fraudulent credit. There is clear admittance of fraud as goods received by the respondent were from the open market. There was absolutely no co-relation. I agree with the revenue that goods have not come to the factory under the cover of specified documents evidencing payment of duty thus there could be no availment of credit. Further in the present case, there is issue of fake invoices without receipt of goods by the suppliers involving fraud. No duty was paid and goods were procured from open market.
10. From the above facts, revenue has clearly brought out that there is committed of fraud involving issuing of invoices without receipt of materials. Once invoices are issued by manufacturer/registered dealer, they make the recipient entitled for availment/utilization of credit. Further, there are confessional statements confessing fraud.
11. Overwhelming evidence has also come on record. There could be no availment of Cenvat credit on fake invoices as it involves fraud. Fraud nullifies everything. Once it is proved that credit has been fraudulently availed on fake invoices, credit has to be reversed with interest for the period of its utilization. Commissioner (Appeals)s order justifying availment of credit and subsequent holding that interest is not required to charged does not have legs to stand as fraud is clearly manifested. I am also not able to agree with the findings that since goods were admittedly procured from open market, and receipt has not been disputed in the factory there did not arose any questions of charging interest. Facts and investigations as discussed in previous paragraphs have clearly brought out fraud and it is admitted that credit availment is not related to goods received as transactions were fraudulent only with the intent to avail illegal credit,
12. In view of above, I accept the appeal of the department for charging of interest on irregularly and illegally availed Cenvat credit and set aside the order passed by Commissioner (Appeals).
13. Ordered accordingly.
(Pronounce in the open court on 11/3/2014) (MANMOHAN SINGH) MEMBER (TECHNICAL) K. Gupta 2