Custom, Excise & Service Tax Tribunal
Shri S.P. Sheth, V.S. Sejpal, Shri ... vs Shri K.M. Mondal, Special Consultant ... on 15 June, 2012
Appearance: Shri S.P. Sheth, V.S. Sejpal, Shri Gajendra Jain, Shri A.K. Singh, Advocates and Mr. Nikhil Rungta, C.A. for the appellants Shri K.M. Mondal, Special Consultant for the respondent
Per: P.R. Chandrasekharan:
22. This case was heard by me on 18/05/2012, 25/05/2012, 08/06/2012 and 15/06/2012. The difference opinion referred to me for decision is reproduced verbatim below:
Following difference of opinion is placed before the Honble Vice President/HOD:-
1. Whether the appellants have correctly availed CENVAT credit of duty on the basis of invoices issued by the dealers in the facts and circumstances of the case as held by the Member (Judicial).
OR
2. Whether the appellants are not entitled to avail CENVAT credit of duty on the basis of invoices issued by the dealers in the facts and circumstances of the case as held by the Member (Technical).
3. Whether the demands are barred by limitation in the facts and circumstances or not.
23. One of the appellants, namely, M/s. Nasik Strips, have taken a preliminary objection on the ground that the honble Member (Judicial) has not given any findings on the issue of limitation whereas the honble Member (Technical) has dealt with the issue on limitation in his order. Under these circumstances, when there has been no concurrent conflicting findings, it cannot be said that there has been a difference of opinion on the issue of limitation and the same cannot be said to be arising from the order of the Division Bench and consequently reference to the Third Member would require modification.
23.1. From the points of reference made above, it is clear that both the Members of the Bench have agreed that the issue as to whether the demands are barred by limitation in the facts and circumstances of the case should be referred to the Third Member. This implies that there is a difference of opinion between the Members in this regard and there cannot be any doubt on this point. Inasmuch as the issue regarding limitation has to be decided by me based on the arguments put forth before me by the appellants on the one side and the Revenue on the other, merely because one of the Members has not discussed the issue in detail, it does not in any way hamper my giving a finding on the subject-matter. Therefore, I do not find any merit in this preliminary objection raised by one of the appellants. Further, if the appellant wanted to raise this objection, the proper procedure would have been to raise the issue before the Division Bench who made the reference to the third Member. Having failed to follow the proper procedure, it is futile to raise this point now before the third Member who can not alter or modify the terms of reference.
24. Before I proceed to discuss the contentions made by both the sides and my conclusion thereon, it would be appropriate to set out the background which, in my opinion, is very important in understanding the issues. The main issue involved in this case is eligibility to CENVAT credit on the basis of invoices issued by dealers. To understand this issue in proper perspective, it is imperative to know the object and purpose of CENVAT credit scheme and how the excise duty regime has been designed to carry out this objective. As is well known, the object and purpose of CENVAT credit is to relieve the cascading effect of taxes when the taxes are levied at various stages in the production/manufacturing chain. The input duty relief can be granted in three ways, namely, (1) invoice credit method, (2) subtraction method; and (3) addition method. These concepts have been lucidly explained in the e-book Modern Vat published by the International Monetary Fund, 2001 edition. Pages 19 to 20 of the said book deals with methods for determining VAT (Value Added Tax) liability. The relevant extracts are reproduced.
Methods for Determining VAT liability As noted, it is a key feature of VAT that tax is charged in effect, if not in form, only on the difference between purchase and sales. There are three main ways in which this can be done > Under the invoice credit where each trader charges output tax at the specified rate on each sale and passes to the purchaser an invoice showing the amount of tax charged. The purchaser, is subject to VAT on his own sales, is in turn able to credit such payment of input tax on his own purchases against the output tax charges on his sales, remitting the balance to the authorities and receiving a refund when there is excess credits.
> Under the subtraction method, tax is levied on amounts based measure of value added calculated on each sales by subtracting allowable purchases from revenues.
> Under the addition method, tax is levied on estimating value added calculated by summing (and adjusting as needed) factor incomes.
Practice and Consensus heavily forms the Invoice credit method.
25. In India, the value added tax regime was introduced in a substantial way in the budget of 1986-87. The Finance Ministers budget speech brings out the objective as under:
113. In excise taxation a vexatious question which has been often encountered is the taxation of inputs and the cascading effect of this on the value of the final product. The Long Term Fiscal Policy had stated that the best solution would be to extend the present system of proforma credit to all excisable commodities with the exception of a few sectors with special problems like petroleum, tobacco and textiles. This scheme, which has been referred as Modified Value Added Tax (MODVAT) scheme - I shall stress MODVAT, not MADVAT - allows the manufacturer to obtain instant and complete reimbursement of the excise duty paid on the components and raw materials.
26. It follows from the above that the method of implementation adopted in India is the tax credit method. This economic concept of Value Added Tax has been encapsulated within the framework of Central Excise law as follows:
26.1. Under Section 37 of the Central Excise Act, 1944, the Central Government has been given the power to make rules to carry out, in effect, the purposes of the Act. Clauses xvi(a) and xvi(aa) of sub-section (1) of the said Section provides for making of rules to provide for mechanism for credit of the duty paid or deemed to have been paid on the goods used in or in relation to the manufacture of the goods and the credit of service tax leviable under the Finance Act, 1994 used in or in relation to the manufacture of excisable goods.
26.2. Rule 11 of the Central Excise Rules, 2002 stipulates that no excisable goods are to be removed from a factory or warehouse except under an invoice signed by the owner of the factory or his authorised agent. Sub-rule (2) of the said Rule stipulates that the invoices shall be serially numbered and shall contain registration number, address of the concerned Central Excise Division, name of the consignee, description, classification and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. The proviso to the said rule provides the dispensation of the copies of the invoices i.e., original copy for the buyer, duplicate for the transporter and triplicate for the assessee. Sub-rules (4) to (6) deal with certain procedural requirements relating to invoices and sub-rule (7) provides that the provisions of said Rule shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. Similar provisions were stipulated in the Central Excise Rules, 2001 and also the Central Excise Rules , 1944 to the same effect.
26.3. The CENVAT Credit Rules, 2004, deals with the procedure relating to availment of credit. As per Rule 3, a manufacturer or a producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as CENVAT credit) of the duties specified therein paid on any inputs or capital goods and received by the manufacturer for use in or in relation to the manufacture of final products. Rule 4 of the said Rule stipulates that CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Rule 9 of CENVAT Credit Rules, 2004 deals with the documents and accounts on the basis of which the CENVAT credit can be taken and this includes an invoice issued by a manufacturer, an importer, a first stage dealer or second stage dealer. Sub-rule (2) further stipulates that no CENVAT credit shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994 are contained in the said document. In case any particulars are missing, CENVAT credit may be taken only with the prior approval of the jurisdictional Asst./Dy. Commissioner of Central Excise, if he satisfied that the goods or service covered by the document have been received and accounted for in the books of accounts of the receiver. Sub-rule (4) of the said rule further stipulates that the CENVAT credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him. Sub-rule (5) further stipulates that the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit. Similar provisions existed in Rule 57A of the Central Excise Rules, 1944, Rule 7 of the CENVAT Credit Rules, 2001 and 2002.
26.4. From the above provisions of law, it becomes evident that to avail CENVAT credit, the inputs or capital goods should have suffered the stipulated duty by the producer / manufacturer of such goods and the goods should be received by the manufacturer availing credit in his factory and the inputs or capital goods so received should be utilised in or in relation to the manufacture of final products. In respect of inputs received from a first or second stage dealer, an additional condition is stipulated to the effect that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoices issued by him. It is further stipulated that the burden of proof regarding admissibility to CENVAT credit shall lie upon the manufacturer taking such credit. Sub-rule (2) of Rule 7 of the CENVAT Credit Rules, 2001/2002 (as they stood at the relevant time) further stipulated that a manufacturer/producer taking CENVAT credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken CENVAT credit are goods on which appropriate duty of excise as indicated in the document accompanying the goods has been paid and the manufacturer shall be deemed to have taken reasonable steps if he satisfies himself about the identity, name and address of the manufacturer/supplier issuing the document specified in the said Rule either from his personal knowledge or on the strength of a certificate given by a person with whose handwriting or signature he is familiar with or on the strength of a certificate issued to the manufacturer or supplier by the jurisdictional Superintendent of Central Excise.
26.5. The Central Excise duty regime underwent a significant change with effect from 01/10/1996. Under the new regime, assessment of the tax liability by the department which hitherto existed was done away with and self assessment facility was extended to the assessees.
26.6. Paragraphs 134 and 135 of the Finance Ministers Budget speech for the year 1996-97 lucidly explains the new regime which was introduced.
134. Our excise procedures are outdated and not in tune with the times. They need to be modified. They should encourage voluntary compliance with tax laws by the tax payers. With effect from 1st October,1996, assessees would no longer be required to furnish copies of invoices along with the monthly returns. All that they would be required to furnish to the excise department will be a simple Return indicating the duty paid on self- assessment basis. Wherever possible the assessees' computers could also be linked to the Department's computers for on line assessment.
135. I also propose to introduce a scheme of selective audit by the excise officers and dispense with the existing scheme of routine examination and checking of returns and documents furnished by the assessees. This scheme would also come into force from 1st October, 1996. While introducing the new regime, in para 138 thereof, the Finance Minister also observed as follows:
138. The Modvat scheme which provides for duty credit on inputs and capital goods has been liberalised considerably over the past few years. Still, there are problems about the coverage of certain inputs and capital goods. I propose to clarify the scope of eligible capital goods by specifying the heading and sub-headings of the tariff relating to capital goods in the Modvat Rules. It is also a matter of concern that there is misuse of the Modvat credit scheme. At present, Modvat invoices can be issued by any dealer registered with the excise department and this facility is reportedly being misused. Therefore, I propose to restrict the issue of Modvatable invoices by dealers upto two stages. Suitable provisions are also being made in the Modvat Rules for charging of interest in the case of wrong availment of Modvat credit and for mandatory penalty for misuse of Modvat facility. It is in this background and context, the issues involved in the present case need to be examined.
27. The issues involved have been categorised into three by the honble Member (Judicial) in para 1 of his order, namely, (1) demand of duty on account of duplicate/parallel invoices; (2) demand of duty on account of dealers invoices where vehicles were found to be non-transport vehicles as per RTOs report; and (3) demand of duty in respect of invoices issued by dealers based on ship breakers invoices. I propose to examine the issues based on the categories indicated above, though not in the same order.
27.1 I first take up the issue relating to admissibility of CENVAT credit in respect of dealers invoices where vehicles were found to be non-transport vehicles as per RTOs report. The total number of invoices in respect of all the five appellants herein is 306 involving a total a credit amount of Rs. 53,82,321/-. The details in respect of each of the appellants are given in para 1 of Member (Judicial)s order. The case of the department is that, in all these invoices, as per the reports of the Regional Transport authorities at Thane, Mumbai, Nasik, Jalgaon, Pune, Raigad, Dhulia, etc. the vehicle numbers mentioned were found to be of tankers, tippers, trailers, three wheelers/ two wheelers, delivery vans, etc. which are incapable of transporting huge quantities of iron and steel scrap, which was the input on which cenvat credit of excise duty was taken by the appellants. Inasmuch as the vehicles were incapable of carrying iron and steel scrap, it is the contention of the department that the appellants did not receive the iron and steel scrap covered by these invoices and they have availed CENVAT credit without receipt of the inputs covered by these invoices.
27.2 The contention of the appellants is that the delivery in these cases were arranged by the dealers themselves and the freight was pre-paid. Discrepancy occurred due to entering of incorrect numbers of the transport vehicles by the dealer as admitted by the dealer. The appellants have received the scrap from the dealer and this fact is not in dispute and they have made payments for these scrap and they have also accounted for the receipt of the scrap in the Form IV register / RG-23 register maintained by them and, therefore, the demand is not sustainable in law.
27.3 The departments case is that the appellant have not adduced any evidence whatsoever towards receipt of the goods carried under the aforesaid invoices by way of goods receipt note (GRN) or consignees copy of the transporters document. The appellants have also not maintained any material inwards register showing the entry of the vehicles into the factory premises carrying the iron and steel scrap and, therefore, the receipt of the goods is not established by the appellants.
27.4 The invoice stipulated under Rule 11 of the Central Excise Rules is not only an assessment document but also a transportation document. That is why the details relating to date and time of removal of the goods, mode of transport, registration number of vehicle, etc. are stipulated statutorily in the document. Since the entire excise duty regime is administered on self-assessment/self-removal basis, the sanctity of the assessment/transport document is paramount. The department has to establish their case only on the basis of the particulars declared in these documents. If the particulars given in the statutorily prescribed document are found to be untrue or incorrect, then an irrebutable presumption arises about the genuineness of the document and the transaction covered by the said document. If the particulars declared in the document are found to be untrue, the onus of proof shifts to the appellant-assessees to show that they have received the goods covered by the document. The evidence that can be led by the assessees are the GRNs or the consignees copy of the transport document. In the case before me, none of the appellants have been able to produce even a single copy of the GRN or the consignee copy even in respect of a single case. Further, it is on record that the appellants have not maintained any gate register or materials inward register which would show the entry of the transport vehicle in the factory premises of the receiver and receipt of the materials in their factory premises. In the absence of any such evidence, it cannot be concluded that the appellant-assessee has discharged the onus cast on them regarding the admissibility of the CENVAT credit. As per the provisions of sub-rule (4) of Rule 7 of the Cenvat Credit Rules, as they stood at the relevant time, the onus is on the manufacturer who avails credit to show that he is entitled for the credit. Inasmuch as the appellant-assesees have not discharged this onus, it would be reasonable to conclude that the appellants are not eligible for or entitled to the CENVAT credit covered by these invoices. The alibi of wrong entry of vehicle number would have been credible, if the mistakes were far and few. In the case before me, a large number of invoices, namely, 306 invoices are involved. Therefore, this argument of human error while entering the vehicle number lacks credibility and I reject the same completely. Further, some of the transporters who were examined by the Department had also corroborated that they had not undertaken transportation of iron and steel scrap to the appellants premises. It is also seen from the statements recorded from the employees of some of the appellants on that the invoices did not accompany the goods but were delivered separately, which also evidences that only the invoices moved and not the goods.
27.5 An identical issue arose for consideration by this Tribunal in the case of Viraj Alloys Ltd. vs. CCE, Thane II 2004 (177) ELT 892 (Tri. Mumbai) In that case also, enquiry with the RTO revealed that the registration number of vehicles mentioned in the invoices were mostly non-transport vehicles and the assessees were not able produce the gate register for entry of the vehicles. In that context it was held by this Tribunal that the assesses are not eligible to avail CENVAT credit covered by those invoices. A similar view was taken by this Tribunal in the case of Ranjeev Alloys Pvt. Ltd. vs. CCE, Chandigarh. 2009 (236) ELT 124 (T). In that case also this tribunal held that the assesses are not entitled for CENVAT credit of the duty paid on the inputs covered by the invoices where the transport vehicles were found to be incapable of carrying the goods covered by the invoices. It was also held that once the department establishes that the details given in the transport documentation are not genuine, the onus shifted on to the appellants to prove that the goods were duly received by them.
27.6 The ratio of the decisions in the above cases, the facts of which are identical to the case before me, applies squarely to the facts of the present case. Accordingly, I hold that the as far as the CENVAT credit involved in 306 invoices where the vehicles were found to be non-transport vehicles as per the RTOs reports and where the appellants have not been able to produce any reliable evidence with respect to the receipt of the goods in the factory, the appellants are not entitled for the CENVAT credit.
28. The next issue for consideration is regarding the demand in respect of invoices issued by dealers based on ship breakers invoices. These invoices are 669 in number and the duty credit involved is approximately Rs. 1.02 crore. The case of the Revenue is that the scrap has been procured from ship breakers in Alang/Bhavnagar in Gujarat by the first stage dealers, M/s. Simandhar Enterprises (SE in short) and M/s. Simandhar Steel Movers (India) Pvt. Ltd. (SSMIPL in short). Some of the ship breakers whose name figures in the invoices issued by the first stage dealers, from whom the the ship breaking scrap was allegedly procured, namely, M/s. R.K. Steel Alloy Industries, Pipavav, M/s. Ajay Alloys Castings Pvt. Ltd. and M/s. Baldev Ship breakers, Alang had closed down their activities since a long time and hence the invoices said to have been issued by them are not genuine. This fact has been confirmed by the letter dated 05/02/2004 and 15/04/2004 issued by the Superintendent of Central Excise, Alang. Further, enquiries made with the transport authorities in Gujarat regarding transport of goods from Gujarat to Bhiwandi/Mumbai revealed that in some cases, the vehicles used for transportation were motorcycles, tankers, cars, autorikshaws, delivery vans, etc. incapable of transporting iron and steel scrap. The third set of evidence are statements of a few of the transporters who were purported to have transported goods from Gujarat to the premises of dealers at Bhiwandi/Mumbai and who have denied transporting any goods from Gujarat to Mumbai. The fourth set of evidence are statements from some of the ship breakers, namely, Gupta Steel (Ship breakers), Shirdi Steel Traders, Malwi Ship Breakers, Panchvati Ship Breakers and Bansal Ship breakers, From these statements it is evident that they have not supplied any steel melting scrap to M/s. Simandhar Steel Movers (India) Pvt. Ltd. or Simandhar Enterprises. Instead, they have supplied steel plates of various dimensions or re-rollable scrap. The fifth set of evidence are three letters dated 12/02/2004, 24/05/2004 and 12/01/2005 issued by the Sales Tax Officer, Bhilad check-post and Dy. Commissioner of Sales Tax (Enforcement), Gujarat wherein they have confirmed that no consignment of iron and steel scrap addressed to the aforesaid two dealers, namely, Simandhar Steel Movers (India) Pvt. Ltd. and M/s. Simandhar Enterprises has crossed the sales tax naka at Gujarat Border during the period 2000-2004 as per the official records. Inasmuch as the goods have not crossed Gujarat border, the above two dealers could not have supplied any ship breaking scrap to the appellants herein and, therefore, the credit availed on such ship breaking scrap is not admissible in law. It has been further noticed in some cases that the prices at which the first stage dealers allegedly supplied the goods to the appellants are less than the prices at which the dealers procured the same from the ship breakers in Gujarat and the price differences vary from Rs. 1,000/- to as high as Rs. 3,000/- per MT which also suggest that the goods, if any, supplied to the appellants are not the same as those received from the ship breakers at Alang, Gujarat.
28.1. The counter arguments adduced by the appellants are as follows. There is no restriction that the re-rollable scrap received from ship breakers cannot be used as steel melting scrap and this issue has been settled by the honble apex Court in the case of Tata Iron and Steel Co. Ltd. vs. Commissioner of Central Excise 1995 (75) ELT 3 (SC). It has also been argued that it is not the responsibility of the appellants to ascertain the source of scrap by the dealers and how it has been transported. So long as they have paid the consideration for the scrap received and paid the duty liability thereon, they are entitled for the CENVAT credit. It has also been argued that scrap could have been transported from Gujarat to Mumbai not only through Bhilad check-post but also through other check-posts and, therefore, the letters of the sales tax authorities at Bhilad does not conclusively establish that the scrap has not been received by the aforesaid dealers. Further, doubts have been expressed about the reliability of the records maintained by the sales tax authorities at Bhilad check post. It has also been argued that the appellants can not be asked to prove the impossible about the movement of scrap from Gujarat to Mumbai. It has also been contended that there has been denial of principles of natural justice in as much as the department has not furnished a copy of the letter written by them to the Sales Tax Authorities in Gujarat and they have reserved the right to cross-examine the Sales Tax Authorities once the copy of the letter written by the department to the said authorities is furnished. Reliance has been placed on the judgments of this Tribunal in the case of Transpek Industry Ltd. vs. Commissioner of Central Excise 2010 (249) ELT 91 and Monarch Metals P. Ltd. vs. Commissioner of Central Excise, Ahmedabad 2009 (95) RLT 334 and the Narmada Bachao Andolan case.
28.2. I have carefully considered the rival submissions and my conclusions are as under: It is a well known fact that ship breaking scrap is a high quality scrap made of marine steel and usually it is a re-rollable scrap which are used by rolling mills and are not used for melting purposes as done by the appellants herein. Reliance placed by the appellants in the case of Tata Iron and Steel Co. cited supra, does not help their case. The dispute in that case related to classification of melting/re-melting scrap and the scrap involved in that case was those generated in the course of manufacture of iron and steel products. In that context, the honble apex Court held that scrap arising in the manufacture of various iron and steel products are treated as melting scrap in developed as well as developing countries and as per the definition of melting scrap, scrap which cannot be used for any other purpose but can be charged into furnace for melting should be classified as melting scrap. Nowhere in the said case, the apex Court held that re-rollable scrap is a melting scrap. As per the statements given by the ship breakers relied upon by the Revenue, it is clear that what was supplied by the ship breakers were steel plates and re-rollable scrap which are not generally used for re-melting and are generally used by rolling mills. It is further on record that the price of scrap supplied by the ship breakers to the dealers in the many cases were higher than the prices charged by the dealers to the appellants for the scrap supplied by them which again points to the fact that the scrap supplied by the dealer to the appellants were not the same as obtained from the ship breakers in Gujarat. There is no substantial time lag between dates of invoices issued by the ship breakers to the dealers and those issued by the dealers to the appellants and in most of the cases, the time lag is only a week or two. Therefore, variation in prices can not be attributed to lags in time. Thus, the details contained in the documents mentioned above is a clear indicator of the fact that what has been allegedly received by the appellants from the dealers are not the same as what has been received by the dealers from the ship breakers. This conclusion is further corroborated/strengthened by the reports of the Transport Authorities in Gujarat wherein it was found that some of the vehicles said to have been used for transportation were two-wheelers, three-wheelers, etc. which are incapable of transporting steel scrap. Again in a few cases, statements of the transporters (owners of vehicles which figure in the invoices) were recorded and they have denied transporting any scrap from Gujarat to the dealers in Mumbai/Bhiwandi. These facts have been further corroborated by the letters issued by the check-post and sales tax enforcement authorities in Gujarat which categorically state that no vehicle carrying scrap from the ship breakers to the two dealers in Mumbai have crossed the commonly used check post at Bhilad during the impugned period. Thus, it is not one single piece of evidence but a series of evidences that have been brought out by the Revenue which corroborate and strengthen each other and which substantiate the fact that from the documents available on record, the scrap claimed to have been received by the appellants are not the same as those supplied by the ship breakers in Gujarat on which duty has been paid. In other words, the goods said to have been received by the appellants are different from the goods covered by the documents on record. These evidences, unearthed by the investigation, have not been controverted in any substantial or meaningful way by the appellants except for the bland statement that they are not required to do so. As regards the allegation of denial of natural justice in non-furnishing the letter written by the department to the sales tax authorities, the said letter is not a relied upon document in any of the show cause notices. What is relied upon is the reports received from the sales tax authorities copies of which have been furnished to the appellants. In the case of Ralectronics vs. UOI [1994 (71) ELT 26 (Kar)], the honble High Court of Karnataka in a similar issue held that - the requirement is to furnish the copies of the materials relied upon in the show cause notice and not of the documents and other materials just referred. There is a difference between relying upon a document and referring to the same. Further in the instant case, the department has not examined any of the Sales Tax authorities; therefore, the question of cross-examination does not arise at all since without examination by the department, there can not be a cross-examination by the appellants. Further, the case is not made out solely on the basis of reports of the sales tax authorities. The said reports is only one of the evidences which corroborates and supports the other evidences. Thus I find that the appellants have raised this plea for the sake of the argument rather than pointing out a de facto illegality in the proceedings. A similar view was held by this Tribunal in the case of R.K. Mill Board Pvt. Ltd. case [2001(135) ELT 1296 (Tri.-Del)]. The honble apex court in the case of Kanungo & Co. vs. CC, Calcutta [1983 (13) ELT 1486 (SC)], while dealing with the breach of natural justice held as follows In the show cause notice issued on August 21, 1961, all the materials on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities.. The same reasoning applies to the facts of the present case. Therefore, I do not find any merits in this argument adduced by the appellants and reject the same.
28.3. As regards the case laws relating to Transpek Industry Ltd. and Monarch Metals Pvt. Ltd., cited supra, the facts of those cases are different and distinguishable. In Transpek Industry Ltd.s case, the issued related to purchase of capital goods by the appellant therein from a registered dealer on payment of duty. In that case there was no dispute about the goods supplied by the dealer and receipt of the same by the assessee. In that context it was held that the assessee buying goods from a registered dealer cannot be expected to examine as to whether the credit availed by such dealer is in accordance with law or not. In the other case pertaining to Monarch Metals Pvt. Ltd. it was held that transporters incriminating statements being in the nature of statements of the co-accused are not a reliable evidence. In the case of before me, the charge against the appellant is that the goods on which they have taken CENVAT credit are not the same as the goods appearing in the invoices and transport documents on which duty has been paid. In other words, the dispute is about the identity of the goods on which credit has been taken and also about the fact whether goods have been received at all by the appellants. Thus, the facts in the case laws relied upon by the appellants are completely different and distinguishable from those involved in the present case. The evidences unearthed by the investigation in the present case are several and overwhelming, each piece of evidence corroborating and supporting the other. Once the department by way of evidences show that the transactions are not genuine, the onus of proving that the transactions are genuine lies on the appellants which the appellants have failed to do miserably.
28.4. Sub-Rule (4) of Rule 7 of Cenvat Credit Rules, 2002 makes it abundantly clear that the onus of proving admissibility to CENVAT credit lies on the person who is availing the credit. I find that in the instant case, this onus has not been discharged by the appellants at all. On the other hand, I find that reliance placed by the Revenue in the case of Besco Ltd. (supra) is relevant to the facts of the case. In that case, the issue related to purchase of bazaar scrap and showing the same as having been brought from dealers registered with the excise department who had issued the invoices without actually supplying the material. In that case, it was held by this Tribunal that the department cannot be expected to go to the source from where the appellants might have procured the bazar scrap and as long as the department can corroborate by evidences to show mala fide nature of transactions, the same is sufficient. In the instant case, I find that a lot of evidence have been brought on record by way of statements of the transporters and suppliers of goods, reports from the RTO and Sales Tax /Check post authorities, and so on to show that the entire transactions were fake and not genuine.
28.5. In the case of A.N. Guha & Co. vs. Collector [1996 (86) ELT 333], this Tribunal held that it is not necessary for the department to establish a fact with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in the factory. In the case of R.V.E.Venkatachala Gounder vs. Arulmigu Viswesaraswami & V.P., (order dated 08/10/2003 in Civil Appeal No. 10585 of 1996) the honble apex Court held as follows:
Whether a civil or a criminal case, the anvil for testing of 'proved', 'disproved' and 'not proved', as defined in Section 3 of the Indian Evidence Act, 1872 is one and the same. A fact is said to be 'proved' when, if considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of a particular case, to act upon the supposition that it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. "The probative effects of evidence in civil and criminal cases are not however always the same and it has been laid down that a fact may be regarded as proved for purposes of a civil suit, though the evidence may not be considered sufficient for a conviction in a criminal case. BEST says : There is a strong and marked difference as to the effect of evidence in civil and criminal proceedings. In the former a mere preponderance of probability, due regard being had to the burden of proof, is a sufficient basis of decision: but in the latter, especially when the offence charged amounts to treason or felony, a much higher degree of assurance is required. (BEST, S. 95). While civil cases may be proved by a mere preponderance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt." (See Sarkar on Evidence, 15th Edition, pp.58-59) In the words of Denning LJ (Bater Vs. B, 1950, 2 All ER 458,459) It is true that by our law there is a higher standard of proof in criminal cases then in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt, but there may be degrees of proof within that standard. So also in civil cases there may be degrees of probability. Agreeing with this statement of law, Hodson, LJ said Just as in civil cases the balance of probability may be more readily fitted in one case than in another, so in criminal cases proof beyond reasonable doubt may more readily be attained in some cases than in others. (Hornal V. Neuberger P. Ltd., 1956 3 All ER 970, 977).
28.6. In the case of Collector of Customs, Madras vs. D.Bhoormul cited supra, the honble Court further held as follows:
It cannot be disputed that in proceeding for imposing penalties. under Clause (8) of S.167 to which s. 178-A-does not apply, the, burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs. absolute certainty is a myth, and-as Prof. Brett felicitously puts it all exactness is a fake" El Dorado of absolute proof being unattainable, the law accepts for it, probability as a working substitute in this work-a- day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of' such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case. The other; cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered - to use the words of Lord Mansfield in Batch v. Archer(1) "according to the proof which it was in the power of one side to prove, and in the power of the other to have contradicted". Since it is exceedingly difficult, if not absolutely impossible, for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as parts of its primary burden. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying s. 106, Evidence Act, the burden to establish those facts is cast on, the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in 'Law of Evidence', (12th Edn. Article 320, page 291), the ".Presumption of innocence is, no doubt, presumption juris, but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property", though the latter is only a presumption of fact- Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice. 28.7. The concepts of reasonable doubt and pre-ponderence of probability have been lucidly explained by the honble apex Court in the case of State of Rajasthan vs. Mohan Lal [2009(237) ELT 435 (S.C.)] as follows:-
36. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law can not afford any favourite other than truth. To constitute reasonable doubt, it must be free from overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt, but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case.
37. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on robust common sense and, ultimately, on the trained intuitions of the Judge. .
28.8. From the case laws cited above, the department need not prove the case with mathematical accuracy. So long as the department has established the case with such a degree of preponderance the existence of a fact, it is sufficient. In the instant case, the burden to establish eligibility to the credit is on the appellant-assessee and if they fail to establish or explain the facts established by the department, an adverse inference arises against them coupled with the presumptive evidence adduced by the department.
28.9. The appellants have also argued that if they are required to show that the dealer from whom they purchased the scrap procured the same legitimately, they are being asked to prove the impossible, which is not permissible and have placed reliance on the judgment of the apex court in the Narmada Bachao Andolan case. This argument of the appellants has no relevance to the case under consideration. The honble apex court in Shankar Raju vs. UOI [2011 (271) ELT 492 (SC)] observed thus:
Where the Legislature clearly declares the intent in the scheme of a language of a statute, it is the duty of the Court to give full effect to the same without scanning its wisdom or policy and without engrafting, adding or implying anything which is not congenial or consistent with such express intent of legislature. Hardship or inconvenience cannot alter the meaning employed by the legislature, if such meaning is clear on the face of the statute. If the statutory provisions do not go far enough to relieve the hardship of the member, the remedy lies with the Legislature and not in the hands of the Court. 28.10. Similarly in the case of India Agencies vs. Additional Commissioner of Commercial Taxes, Bangalore [(2005) 2 SCC 129], the Supreme Court observed that if the condition on which the concession was granted was mandatory, then a liberal view could not be taken merely on the ground that there was hardship to the dealer. Issues of hardship, ruled the Supreme Court, are for the legislature to consider.
28.11. Rule 7(4) of Cenvat Credit Rules, 2002 (or corresponding provisions in its predecessor or successor Rules) as it stood at the relevant time placed the onus of eligibility to avail the credit on the person taking the Cenvat Credit. Once the Revenue discharges the burden that the particulars declared in the documents on the strength of which the credit has been availed are not genuine or are fake, then the onus is on the assessee to prove that they have availed the credit correctly and are entitled for the credit. That onus can not be condoned on the ground of hardship or inconvenience. In the instant case, the appellants have not discharged this onus cast on them by the statute.
28.12. In the light of these judgments of the honble apex Court, in the case under consideration, I am of the considered view that the appellants are not entitled to avail CENVAT credit of the duty paid on ship breakers invoices.
29. The next issue for consideration is whether the appellants are eligible to avail CENVAT credit on account of duplicate/parallel invoices.
29.1. The number of invoices involved is 1089 entailing a credit of Rs. 2.44 crore approx. The case of the department is that in the RG23-D account maintained by the dealers, the invoices issued to the appellants are not reflected and invoices bearing the same number are shown to have been issued to other buyers though for a different quantity and value. Further, in many cases, the transporters who are said to have transported these goods from the dealers premises to the appellants have denied transporting these goods. In the case of appellants situated in Nasik, the Municipal Corporation authorities have confirmed that as per their records, escort permits, which are statutorily required for movement of these goods into the Corporation area, have not been issued at all which again corroborates the fact that the impugned goods (melting scrap) have not been received by the appellants at all.
29.2. In the case of M/s Amar Ispat Pvt. Ltd., one of the appellants in the present case, Sri.Sunil Fakirchand Agarwal, who was working as the General Manager of the said appellant firm during the material period, in his statement dated 03/08/2006, recorded under section 14 of the Central Excise Act, 1944. averred as follows:-
To-day you have shown me the invoices issued by M/s Simandar Steel Movers India Pvt. Ltd. to M/s Amar Ispat Pvt. Ltd. and the copies of the RG 23 D register maintained by M/s Simandar Steel Movers Pvt. Ltd. I agree that 357 invoices issued by M/s Simandar Steel Movers India Pvt. Ltd. to M/s Amar Ispat Pvt. Ltd. are not accounted for in the records of M/s Simandar Steel Movers Pvt. Ltd. In this regard, it is only possible that M/s Simandar Steel Movers India Pvt. Ltd. were supplying only locally procured iron and steel scrap and to give benefit of cenvat credit to the customers were issuing fraudulent invoices. In respect of the 172 invoices which are appearing on the records of M/s Simandar Steel Movers Pvt. Ltd. from the evidences shown by you I agree that the invoices are issued against supply of locally procured iron and steel scrap. In the very same statement, it has been further admitted that the cenvatable invoices, delivery challans and bills were sent directly to the office of M/s Amar Ispat Pvt. Ltd. at Tulsi Dham, Thane (W) and the invoices were subsequently sent to the factory to make entries in the cenvat account. This admission clearly shows that the invoices did not accompany the goods. As regards the statements of the transporters (whose vehicle nos. appear in the invoices) denying the transportation of the goods, the General Manager has stated that he has no reason to dispute these statements and the reports given by the RTOs and he could not confirm whether the invoices issued by M/s Simandar Steel Movers India Pvt. Ltd. to M/s Amar Ispat Pvt. Ltd. were for the goods actually supplied by them. The above statement of the General Manager has also been corroborated by the Director of the said firm Mr. Sandeep Bhagwandas Garg who in his statement dated 29-7-06, inter alia, admitted as follows:- Most of the times the invoices were sent to us subsequently by the broker in a large envelop or folder, so most of the times the invoices were not accompanying the trucks, but subsequently handed over by the broker.
29.3. In the case of Jai Prakash Strips, the department had recorded the statement of one Mr. Vinod Pandey, Quality Control In-charge who was in charge of the receipt of the material in their factory. In his statement dated 2/7/05, he has, inter alia, admitted that they were receiving M.S. scrap like mix scrap such as small cuttings of plates, pipes and remnants. In his statement dated 30-4-2004, Mr.H.S. Shah, Director of M/s Simandar Steel Movers (P) Ltd., had, inter alia, stated that they were dealing in both cenvatable material as well as non-cemvatable material. Both these goods were stored in the same godown at Bhiwandi. The non-cenvatable material covers the scrap material such as pieces of angle-channel, plate cuttings, pieces of pipes etc. On comparison of these two statements with respect to the nature of the materials supplied by the dealer and received by the appellants, it is clear that the material was non-cenvatable material. In other words, non-cenvatable material was supplied under the cover of invoices for cenvatable material, which once again shows that the documents supplied by the said dealer did not pertain to the goods supplied and the cenvat credit was transferred fraudulently.
29.4. The appellants contention is that they are not responsible for maintenance of the accounts by the dealer. So long as they have paid consideration for what has been received by them, it is sufficient and they cannot be expected to undertake any responsibility more than this.
29.5. This argument is wrong for the following reasons. Sub-rule (3) of Rule 7 of CENVAT Credit Rules, 2002 as it stood at the relevant time (as also its predecessor and successor rules) clearly provided that CENVAT credit in respect of inputs or capital goods purchased from a first or second stage dealer shall be allowed only if such dealer has maintained records indicating the fact that the inputs or capital goods supplied from the stock on which duty was paid by the producer of such goods or capital goods and only an account of such duty on pro-rata basis has been indicated in the invoice issued by him. From the records available, it is seen that bulk of the invoices issued to the appellants do not figure in the RG23-D account maintained by the dealer. Therefore, as per the provisions of sub-rule (3) of Rule 7, the appellants are not entitled for the credit. Further, it is seen from the invoices issued to the appellants that the date of issue of these invoices are invariably subsequent to the date of invoices bearing the same number issued to the other parties. If the goods have already been supplied to other parties, the question of issuing invoices bearing the same number to the appellants herein, though for a different quantity and value does not arise. This is a clear pointer to the fact that the invoices issued to the appellants were duplicate/ bogus. Otherwise, there was no need to issue invoices at a subsequent date(s) in almost all cases. Thirdly, when stock taking was undertaken in the premises of the dealer both in 2001 and 2003, it was found that there was no stock of the goods at all whereas the invoices were issued even without physical stock being available. This is evident from the panchanama proceedings of the stock taking undertaken at the dealers premises. Further, there are statements from some of the appellants officials stating that they did not receive the invoices issued by the dealers along with the goods but the invoices were received a few days later. In other words, this clearly shows that only invoices were traded and not goods. Fourthly, the certificate issued by the Nasik Corporation authorities available on record clearly shows that in respect of the appellants situated in Nasik, the goods did not enter the Corporation limits at all. These evidences unearthed by the department clearly reveal that the transactions were bogus and fake. Further, there has been no effective rebuttal of these presumptions raised by the Revenue against the appellants and as per sub-rule (4) of Rule 7 of the CENVAT Credit Rules, as it stood at the relevant time the onus of proving that they are eligible for the CENVAT credit lies on the appellants which they have failed to discharge. Therefore, ratio of the judgment in the cases of D. Bhoormul, cited supra, and A.N. Guha cited supra, apply squarely to the facts of the case and, therefore, even in respect of the parallel invoices/duplicate invoices the appellants are not entitled for the credit.
29.6. The facts of a case decided by the honble High Court of Bombay on 11th May, 2012 in M/s Mahalaxmi Cotton Ginning Pressing and Oil Industries v. The State of Maharashtra & Ors. [2012 (191) ECR 0433 (Bombay)] closely resembles the case before me and the ratio decided therein has great relevance. In that case, the constitutional validity of section 48(5) of the Maharashtra Value Added Tax Act, 2002 was under challenge. If the constitutional validity was upheld, the petitioner sought a mandamus to the State to recover from the vendor tax paid on goods of which a set off was claimed. Consequential orders of set off and refund were sought. The petitioner was a re-seller of cotton bales and he filed tax returns and based on the purchases effected, claimed Input Tax Credit (ITC) by way of set-off under section 48. The petitioner supported his claim by tax invoices of his vendor. The petitioner claimed to have submitted data, transaction wise, in relational to its supplier, including invoice number, date of supply, registration number of the supplier and VAT paid on each purchase. The Dy. Commissioner of Sales Tax informed the petitioner a list of dealers from whom the petitioner had effected purchases where the data received was matched or, as the case may be, unmatched. The petitioner was called upon to submit ledger copies and proof of the filing of returns by the dealer in those cases where the data was unmatched. Failing this, it was stated that the ITC of the concerned dealers would be disallowed. The assessing officer disallowed set off where the data did not match. The petitioner challenged the assessment by way of a Writ Petition before the honble High Court of Bombay. On behalf of the petitioner, it was contended that the VAT act did not provide any machinery for the purchaser to ascertain whether the seller has actually paid VAT and the act did not protect the purchaser in a case where the seller has not paid the tax into the Government Treasury which he had collected from the customer and this constitutes an unreasonable classification between the seller and the purchaser. Section 48(5) of the said VAT Act was arbitrary as it contemplates disallowance of ITC claimed by the purchaser if the seller had not deposited tax into the treasury and no provision had been made if tax is recovered from the seller by the State in future. It was also argued that section 48(5) cast a burden on the purchasing dealer which is impossible to perform since the Act and the Rules do not empower the purchasing dealer to seek any document from the vendor other than the tax invoices for the purchases made. Section 48(5) would cast an unbearable burden on the purchasing dealer. Though he has paid tax to the vendor, if a set off is disallowed, he would be liable to pay the same amount to the Revenue once again together with interest and penalty which may result in closure of business contrary to Articles 14 and 19(1)(g).
29.7. Negativing the contentions of the petitioner, the honble High Court held as follows:-
27. The legislature did not contemplate the grant of a set off without any tax being received into the Government Treasury. The grant of set off without receipt of tax into the treasury would result in a loss of revenue, a consequence which the provision of set-off does not contemplate.
29. A set off constitutes a concession granted by the legislature. In the absence of a set-off under section 48(5), the selling dealer would be liable under the charging provision of MVAT Act,2002 to pay tax on the sale consideration. There is no independent right to a set off apart from section 48. The entitlement to a set off is created by the taxing statute and the terms on which a set off is granted by the legislation must be strictly observed.
42. Moreover, the concept of a set off presupposes that tax has been paid in respect of the goods in respect of which a set off is claimed. To allow a set off though the tax has not been paid actually would be to defeat the legitimate interests of the Revenue. Hence, in the overall statutory scheme of section 48, sub-section(5) has a rational basis and foundation. .
In granting a set off, the legislature can impose conditions and that imposed in section 48(5) is not lacking in rationality. Moreover, the scheme of set off in section 48 has to be read in its entirety and as one cohesive whole. The legislature can not be compelled to grant set off, ignoring the conditions which it imposes. The conditions are not severable and are part of one integrated scheme. 29.8. The object and purpose of set off in the VAT Act and the concept of CENVAT credit in the Central Excise Act and the Rules are identical, that is, to reduce the cascading effect of taxes. Similarly the conditions imposed for availing set off under section 48 (5) of the MVAT act, closely follows the conditions imposed in sub-rules (2), (3) and (4) of Rule 7 of the Cenvat Credit Rules, 2002 and similar provisions in the Central Excise Rules, 1944, Cenvat Credit Rules, 2001 and Cenvat Credit Rules, 2004, as they stood at the relevant time. Therefore, the ratio decidendi of the above judgment of the honble High Court of Bombay, which is also the jurisdictional High Court for this bench of the Tribunal, needs to be scrupulously followed. Accordingly, I hold that the appellants herein have not made any case for their eligibility to cenvat credit on the parallel/duplicate invoices received from the dealers.
30. The last issue that needs to be considered by me relates to application of time-bar in the instant case. The appellants have contended that they cannot be held responsible for the fraud committed by the dealer and, therefore, extended period of time cannot be invoked for reversal of CENVAT credit taken by them. They have relied upon a number of decisions in this regard. It is also their contention that so long as they have paid for the scrap which they have purchased, no fraud can be attributed to them. This contention of the appellants is completely misplaced. When the department has adduced evidence to the effect that documents on the strength of which credit has been taken are fake/bogus, that allegation has to be effectively and successfully countered as the onus is on the person who is availing the credit to prove that he is eligible for the credit. In none of the cases, the appellants have shown any proof of receipt of the material supplied by the dealer. The primary evidence of receipt of goods is the consignees copy of the transport document and the corroborative evidence would be the gate register/material inward register which shows the entry of the vehicles carrying the goods into the factory premises of the appellants. The appellants have not submitted any such proof or maintained any such records showing the receipt of the materials. In a few cases there is a clear admission that the documents on the strength of which credit was availed was not accompanying the goods said to have been received but were received separately. So long as the appellants have not discharged the onus cast on them about the receipt of the materials, the presumption that they have not received the materials remain valid and irrebuttable. In such a situation, the only reasonable inference that can be drawn is that they are also a party to the fraud committed by the dealers. This Tribunal in the case of AIA Engineering Pvt. Ltd. vs. Commissioner of Central Excise, Ahmedabad II 2006 (195) ELT 154 held that where credit has been availed without actually receiving any duty paid inputs and the same has been corroborated by the statement of dealers, extended period of time is rightly invokable. Revenue has also relied on the decision of the honble apex Court in the case of Commissioner of Customs (Preventive) vs. Aafloat Textiles (I) Pvt. Ltd. 2009 (235) ELT 587 (SC). In the case before me, the transaction undertaken by the appellant is a fraud committed on the exchequer in connivance with the dealer. Without receiving duty-paid goods, the appellants availed CENVAT credit on the basis of invoices which covered altogether different goods and in many cases the invoices did not accompany the goods and were received separately. These facts were known to the appellants. Yet they connived with the dealer in defrauding the exchequer by claiming cenvat credit on bogus/fake documents. The honble apex Court in the case of Aafloat Textiles (I) Pvt. Ltd.(cited supra), in para 11 thereof, has held as follows:
11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi and Ors. [2003 (8) SCC 319].
30.1. What is involved in the present case is fraud or collusion or a conspiracy to deprive the exchequer of its legitimate dues and to avail ineligible CENVAT credit. In such a situation, extended period of time is rightly invokable and, therefore, I hold that the demand for CENVAT credit wrongly taken invoking the extended period of time is sustainable in law.
31. To conclude, I hold that the appellants are not eligible to avail CENVAT credit in the instant case and that the extended period of time has been rightly invoked in demanding the same. Thus I concur with the findings of the honble Member (Technical) with respect to the points of difference referred to me.
32. With these findings, I direct the Registry to place the matter before the Division Bench for further necessary action in the matter.
(Pronounced in Court on 10/07/2012) (P.R. Chandrasekharan) Member (Technical) */as 124 83