Custom, Excise & Service Tax Tribunal
M/S Subodh Steels vs C.C.E. & St Chandigarh-I on 11 August, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT No. II APPEAL NO. E/609/2010 [Arising out of Order-in-Original No. 67/CE/CHD-I/2009 dated 10.12.2009 passed by the Commissioner of Central Excise Chandigarh.] Date of hearing: 11.05.2017 Date of decision: 11.08.2017 For approval and signature: Honble Mr. Devender Singh, Member (Technical) =======================================================
M/s Subodh Steels.
:
Appellant(s) VS C.C.E. & ST Chandigarh-I :
Respondent(s) ======================================================= Appearance:
None for the Appellant(s) Sh. Tarun Kumar, A.R. for the Respondent(s) CORAM:
Honble Mr. Devender Singh, Member (Technical) FINAL ORDER NO. 61496/2017 Per : Devender Singh.
None is present for the appellants. There is a letter on record received on 08.05.2017 in which the Ld. Advocate for the appellant has requested that the appeal may be decided on the basis of facts and record and submission made in the appeal memo and stated that no personal hearing is required in this case. I also find that there has been no appearance on behalf of appellant on dates of previous hearing on 09.03.2017, 30.3.2017 and 09.05.2017.
2. In view of the express request by the Ld. advocate, the matter is taken up for final decision with the help of Ld. AR.
3. The brief facts of the case are that the appellants M/s Subodh Steels was registered as a second stage dealer. During the period 07.06.2007 to 25.09.2007, one M/s Rohit Ispat registered as first stage dealer under the Central Excise Rules, 2002 for dealing in different iron and steels products, fraudulently passed on Cenvat Credit of Rs. 2,31,14,016/- on 8655.77 MT of pig iron to different furnace units and to one second stage dealer namely M/s Subodh Steels (appellant in this case). The investigations revealed that M/s Rohit Ispat had obtained registration fraudulently by submitting a fake and bogus rent deed by forging the signature of the landlord of the premises and issued Cenvatable invoices without having any office or godown to store the excisable goods and also did not maintain/produce the record before the investigation officers. The investigation also revealed that goods cleared by them to Noticee (M/s Rohit Ispat) were foundry grade II low manganese Pig Iron and that the end use of this type of pig iron was for the production of different types of casting articles in foundaries whereas Noticee M/s Rohit Ispat purportedly cleared these goods to furnaces. Hence, M/s Rohit Ispat along with M/s Subhodh Steels, Mandi Gobindgarh was involved in the issuance of wrong Cenvat invoices without actual receipt/storage/dispatch of pig iron. On that basis, the Ld Commissioner has concluded that M/s Subhodh Steels, Mandigobindgarh issued 5 Cenvatable invoices without actual receipt/storage/dispatch of pig iron weighing 126.800MT to two manufacturing units.
4. During the investigation self-inculpatory statement dated 3.2.2008 of Sh. Suresh Yadav, Prop., of Rohit Ispat admitting the facts was recorded by the officers under Section 14 of the Act. Sh. Suresh Yadav had confessed that he was not actual trader but indulged in issuance of invoices only and that trading of pig iron shown by him were only paper transactions. The statement dt.03.02.2008 of Sh. Suresh Yadav was never retracted. As for the main case pertaining to M/s Rohit Ispat, the Ld. Commissioner in the same Order-in-Original gave the following findings:-
33.1 The facts are not in dispute. There is enough evidence that the Noticee did not have any place of storage. The notice did not exist at the premises for which registration was granted. The Registration Certificate of the noticee was cancelled retrospectively w.e.f. 20.12.2006 vide order of Assistant Commissioner Mandi Gobindgarh No. 91/CE/AC/MGG/07-08 dt. 19.02.2008. In this order, it was held under Para 5 it is clear that the Noticee had forged the rent deed in respect of the said premises to show the possession of the same. Had the Noticee actually existed there, its records/ computer and the stock of goods, Pig Iron etc. should have been found there during verification by the local Preventive staff but during their visit nothing of this kind was found existing there. Further, their arrest by the Police on the basis of FIR No. 260 dt. 10.10.2007 under Section 465, 467 & 469 of the IPC and Sections 65, 66 & 70 of the information & Technology Act and their remaining in judicial custody from 12.10.2007 to 23.11.2007 proves that they were indulging in illegal and nefarious trading activities to defraud the government exchequer. 33.2 As per provisions of Central Excise Law, registrations to Dealers are granted under Rule 9 of the Rules, subject to the conditions, safeguards and procedures as specified by notification by the Board. Notification No. 35/2001-CE (NT) dt. 26.06.2001 (as amended) issued under Rule 9 empowers the Asstt./Deputy Commissioner of Central Excise to revoke/suspend a registration granted, if the holder of such certificate or any person in his employment, is found to have committed breach of any of the provisions of the Act or the Rules made there under. The condition No. (i), of the Registration Certificate granted to the Dealer clearly mentions that the registration certificate is valid only for the premises and purposes specified in the application. Further, instruction (1) of the Form A-1 Registration Application, specifically states that changes in the information subsequent to the registration must be brought to the notice of the Central Excise Department and such changes should be indicated by ticking the relevant box at the top of the forms, providing the registration number and filling of only such information that has undergone change leaving the boxes for information not to be amended blank. The Dealer had not filed any amendment application implying that, there was no change in the information already submitted by them at the time of obtaining the registration. Since the Dealer did not exist at premises for which it had obtained the registration by fraud by submitting fake and bogus Rent Deed by forging the signatures of the Landlord Sh. Rajinder Parshad and it had not filed any amendment application regarding changes in the information already furnished by them, the Registration held by the Dealer have become null and void and as such the Cenvatable invoices issued by the Dealer appeared to be invalid documents on which Cenvat Credit did not appear to be admissible. After ascertaining that the Noticee did not exist at the premises for which the registration granted to them; it did not have any godown to store the goods; it had not produced its records before investigating agencies; its Registration Certificate had been cancelled retrospectively w.e.f 20.12.2006 and that Sh. Yadav prop. Of the Noticee confessed to have indulged in paper transactions without actual receipt / storage / dispatch of Pig Iron. Some of the buyers had voluntarily debited the Cenvat Credit wrongly availed by them. This is however, only one part of the story. Second and most important part is that the notice had issued invoices without dispatching any goods, on the strength of which the buyers had availed credit wrongly.
5. After the investigation, the registration of M/s Rohit Ispat was cancelled retrospectively w.e.f. 20.12.2006 as he had produced fake and forged rent deed of the premises. The investigation also revealed that M/s Rohit Ispat had shown sale of 126.800 MT of Pig Iron through 5 sale invoices to the appellant, who had further passed on Cenvat Credit to two manufacturers namely Punjab Engg. Works, Shergarh and M/s Hari Concast Pvt. Ltd., Nabha.
6. In their pleadings, the appellants have argued that the Department has adduced the evidences or statements about paper transactions without selling the goods. It is contended that the appellant had received the goods and further sold to the manufacturing units. I find that the Department has adduced sufficient evidence that the first stage dealer M/s Rohit Ispat had no godown, that he had taken the registration on the basis of bogus rent deed and on the trading of pig iron shown as admitted by the proprietor of the M/s Rohit Ispat were only paper transactions without any accompanying goods.
7. Evidently, there was fraud committed right from the day the dealer M/s Rohit Ispat applied for his registration and false transactions were made repeatedly & systematically to defraud Revenue.
8. In this regard, it is relevant to refer to the para 16 and 21 of the order of this Tribunal in the case of Samung India Electronics Ltd. vs. Commissioner of Customs, New Delhi-2014 (307) ELT 160 (Tri.-Del.) which are extracted below:
16.?Suppression of a material fact would also amount to a fraud on the court [(see Gowrishankar v. Joshi Amha Shankar Family Trust, (1996) 3 SCC 310 and S.P. Chengalvaraya Naidus case (AIR 1994 S.C. 853)]. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity. When fraud is established that unravels all. [Ref : UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.) and in Delhi Development Authority v. Skipper Construction Company (P) Ltd. - AIR 1996 SC 2005]. Any undue gain made at the cost of Revenue is to be restored back to the treasury since fraud committed against Revenue voids all judicial acts, ecclesiastical or temporal and DEPB scrip obtained playing fraud against the public authorities are non est. So also no Court in this country can allow any benefit of fraud to be enjoyed by anybody as is held by Apex Court in the case of Chengalvaraya Naidu reported in (1994) 1 SCC I : AIR 1994 SC 853. Ram Preeti Yadav v. U.P. Board High School and Inter Mediate Education (2003) 8 SCC 311.
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21.?Fraud and justice do not dwell together for which penal provisions are enacted to eradicate evils of defrauding Revenue which is anti-social activity adversely affecting public revenue. Such provisions are construed in the manner which curbs the mischief, promote their object, prevent their subtle evasion and foil their artful circumvention. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take in its fold any one or series of unlawful acts committed or omissions made. An act of fraud on Revenue is always viewed seriously. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human 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.
9. Further, in the case of ICI India Limited vs. CC, Calcutta-2003 (151) ELT 336 (Tri.Del.), this Tribunal has held that fake documents is ab intio unlawful and void and action on such document cannot sanctify it or make it lawful. Such document cannot give rise to any right or benefit in law. Following the above ruling, the fake invoices issued by M/s.Rohit Ispat are inherent nullity and no credit of duty could be taken on such fake invoices.
10. The second plea of the appellant is that as duty payment on the goods was not disputed, no doubt could be raised on the ground that the invoices were raised by the registered dealer having no godown in this regard, the appellants have relied on the judgment of Honble Punjab and Haryana High Court in the case of CCE, Jalandhar Vs. J.C.T. Limited 2009 (234) ELT 47 (P&H)., I find that the facts are completely different in the said case in that there was no allegation of fraud or bogus rent deed to obtain a registration. The dealer was simply un-registered. In the present case, the dealer had actually registered and thereafter it was found that the registration was taken on the basis of forged and bogus rent deed. Further in the above cited case, the assessee had produced the certificate from the manufacture showing payment of duty invoice wise and in those circumstances, Honble High Court held that the Modvat could not be denied. No such invoices are on record in this case. The appellants have further contended that the registration to a dealer was granted after physical verification and the dealer was regularly filing the return showing purchase and sale of goods. It is argued that even if there was a fraud, it was on the part of that dealer and the appellants could not be penalized. I find that the assertion of the appellant that dealer was filing the regular returns is factually not correct. The appellants have also claimed that they have received goods along with invoices. When the dealer of the purportedly supplied goods himself has admitted that no goods were sent with their invoices and the said dealers godown has been found to be non-existent on the basis of bogus or fake rent deed, in such a situation, the appellants claim of actual receipt/storage/dispatch of pig iron is an impossibility and therefore fraudulent and hence liable to be penalized. The appellants have further argued that invocation of Rule 9(3) is contradictory to the offence being alleged on the part of the appellant, I find that the penalty has been proposed against the appellant under Rule 26(2) of the Central Excise Rules for issuing 5 Cenvat Credit invoices without actual receipt/storage/dispatch of pig iron. Hence, this contention of the appellant is not tenable. The appellant further contended that it was not their responsibility to confirm the godown of the dealer. I find that the allegation on the appellant is about issuing invoices without actual receipt/storage/dispatch of the goods which they have not rebutted successfully. As I find that the appellant indulged in issuing invoices on the basis of paperless transactions that they had with M/s Rohit Ispat, they were very much part of the fraud. The appellant further contended that the Department has alleged violation of provision of Cenvat Credit Rules but the penalty on the co-noticee is under Central Excise Rules. I find that this objection of the appellant has no the legal basis as under Rule 26(2) of Central Excise Rules, penalty is imposable on any person who meets the requirement of that Section, which the appellant meet as they issued invoices without delivery of goods. The appellants have further contended that it took 10 months for the Department to unearth fake and bogus documents, so how an innocent dealer would have known such a thing. I agree with Ld. Commissioner that it is not relevant whether the Department took ten months as it needed investigation. The appellant clearly failed in their obligations by accepting invoices without receipt of any goods. It is also supported by the fact that two buyers M/s.Punjab Engineering Works reversed the Cenvat credit of Rs.53,682/- along with interest of Rs.4,210/-. The other unit was closed since December, 2007.
11. The appellant have also requested for cross examination of the Superintendent, Inspector and others who had verified the godown of M/s.Rohit Ispat. The same request was made by the appellant to the adjudicating authority Personal hearing was given to them by the adjudicating authority on several occasions but they did not appear before him. I find that when the appellant failed to participate in the original proceedings, despite several opportunities were granted to them, it reflects that the appellant are following dilatory tactics to deprive the Revenue from recovery of its legitimate dues. Hence, the request is rejected.
12. In view of the above, there is no infirmity in the order of the Ld. Commissioner and the same is upheld.
13. The appeal filed by the appellant is dismissed.
(Order pronounced in the Court on 11.08.2017) Devender Singh Member (Technical) NS 9 E/609/2010- CHD