TMI Blog2022 (5) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on the goods invoiced to appellant, on which credit was availed were in fact received by the trader prior to 09/07/2004. If the trader issues an invoice of 18/08/2004; it has to be presumed that the Excise registration certificate issued to him was valid. If that be so, the issue needs to be considered from this angle also. Availment of CENVAT credit was held to be correct on the principle of revenue neutrality by Tribunal in the case of COMMISSIONER OF C. EX., PUNE-I VERSUS KEETEX [ 2007 (10) TMI 243 - CESTAT, MUMBAI] . There are no hesitation whatsoever in holding that irrespective of the registration or otherwise, under Rule 12B, the appellants are entitled to CENVAT Credit on inputs used by them. Whether the corrigendum/addendum dated 17.9.2007 to the show-cause notice is valid in law? - HELD THAT:- It is not the appellant's claim that the original show-cause notice and the addendum were on separate issues. The original show-cause notice dated 9.8.2005 seeks to demand the inadmissible credit of Rs. 2,88,89,873/- availed by the appellants after the rescinding of Rule 12B. The addendum 17.9.2007 supplements the allegations in the original show-cause notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cenvat credit of the Cenvat Credit Rules, 2002/Rule of the Cenvat credit Rules, 2004 read with Section 11AC of Central Excise Act-1944. Whether penalties are imposable on different appellants? - HELD THAT:- A penalty of Rs. 20,00,000/- has been imposed on Mr. Prakash Jokhani and Bimal Jokhani. However, the learned adjudicating authority has not clearly delineated the role of Shri Prakash Jokhani separately viz-a-viz. Bimal Jokhani. In fact, Adjudicating Authority finds that Shri Prakash Jokhani cooperated with the investigation, whereas Shri Bimal Jokhani has not responded to summons and has not joined the investigation. Therefore, imposing similar penalty on both of them defies logic. Looking into the role played by Shri Prakash Jokhani, we are inclined to reduce the penalty from Rs. 20,00,000/- to Rs. 5,00,000/-. Appeal allowed in part. - Excise Appeal No. 843 of 2009, 844 of 2009, 852 of 2009 and 911 of 2009 - A/ 85237-85240/2022 - Dated:- 28-3-2022 - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri Darius B. Shroff, Advocate for the Appellant Shri Anantha Krishnan, Authorized Representative for the Respondent OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng interest only on 2,77,00,617. 2. Shri Darius Shroff, Advocate, appearing for the appellants (in Appeal No. E/843 844/2009) submits that learned adjudicating authority confirmed the allegations raised in the show cause notice holding that they are not manufacturers after the revocation of Rule 12B with effect from 09.07.2004; learned Commissioner confirmed the amount demanded in the addendum though the addendum was issued on a different ground alleging that the appellant have availed CENVAT Credit on the strength of bogus invoices issued by 13 suppliers of grey fabrics; the appellants were however registered as a warehouse, had warping machine installed, carried out cutting and tracking of fabrics and exporting the fabrics; they are manufacturers in view of Section 2(f) of Central Excise Act 1944; the existence of warping machines has been admitted in show cause notice; as per chapter note 2 to chapter 52 of first schedule of Central Excise Tariff Act 1985, the process of conversion of duty paid yarn into warped yarn amounts to manufacture; Deputy commissioner Central Excise Kalyan-I, vide his letter dated 05.08.2005 stated that the unit was functioning as manufacturer prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls received were purchased in the open market; the cheques were issued by the appellants to the respective suppliers were encashed by third parties; the appellants did not take reasonable steps to confirm the geniuses of the suppliers of raw materials as required by Rule 9(3) of CENVAT Credit Rule. 6. Learned counsel submits that the issue raised in the addendum is new one and a separate show cause notice needed to be issued as held by the Tribunal in the case of Full Specialty Ltd.: 2004 (177) ELT 217 (Tri-Del); addendum which incorporates totally new ground is required to pass the test of limitation; the appellant had not indulged any act of willful misstatement or suppression of facts and therefore, extended period cannot be invoked; a show cause notice does not bring on record any evidence of collusion of the appellants with the suppliers; in respect of M/s. Sunshine Textiles the allegation that they have supplied only invoices and that there was no supply of grey fabrics is totally false; commission and omission if any are on the part of the suppliers and as such credit availed by the appellants cannot be denied. He relies upon the following cases:- (i) Nizam Sugar Fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds that appellants do not have transportation details and the checks issued by the appellants have been encashed by third parties who are not connected; he submits that the responsibility of transportation of grey fabrics to the appellant doors is on the suppliers and not on the appellant; appellant were not require to pay for the transportation; Shri Santosh Kumar Harishchandra Gupta, Director of M/s. Fast Live Ltd., stated that transportation charges were paid by the suppliers; he also stated that the checks were got encashed through the agents; therefore, the allegation on the appellant is not well founded; it is a fact on record that out of 13 alleged bogus suppliers, the department could identify the addresses of 4 suppliers that is Sunrise Textiles, Fast View Company Pvt. Ltd., Sajjan Textiles and Shriman Textiles; adjudicating authority himself recorded a finding that out of 13 suppliers department could not produce proof of non existence of at least 2 suppliers that is Shri Nathjee Textiles and Arvind Textiles; appellant submitted copies of the acknowledgment of application for registration in respect of Shri Charmi Creation; and Kevin Synthetics; therefore, the credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Venus International in April 2005 and withdrawn all the record it is understandable the reversal was made at a letter date in June and August 2005; learned commissioner ignore the fact that if the appellants received the goods back they must have repaid the amount involved; learned commissioner should have asked M/s. Venus International to produce the evidence like LR Vehicle No., invoice, challan etc; instead he has chosen to imposed penalty on the appellant without any authority of law. 10. Shri Anantha Krishnan, Commissioner, Authorized Representative for the Respondent department counters the submissions of the appellants in E/911/09, E/844/09, E/852/09 and submits that with omission of Rule 12B w.e.f. 09.07.2004, the status of M/s. Venus International as manufacturer ceased, but the appellants continued to avail Cenvat credit and paid duty on final product; investigation conducted also revealed that the appellants were availing Cenvat credit on bogus/fake invoices fraudulently and were claiming rebate of excise duty paid; appellants had claimed fraudulent rebate of Rs. 1,56,81,868. 11. Learned AR submits a brief as to how credit availed from different manufacturers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Charmi Creations, Bhiwandi (v) M/s. K.P. Textiles, Bhiwandi, (vi) M/s. Kevin Synthetics, Bhiwandi could not be located at their shown addresses. (vi). M/s. Star Enterprises and M/s. Subhalxmi Trading did not exist at the given address. M/s. Suraj Textiles' address turned out to be of Shri Shaikh Basher, Scrap dealer who clarified that there was no Suraj Textiles. (vii). Total Cenvat credit, availed fraudulently on fake invoices, was Rs. 1,21,61,218/- (as per Annexure H to the SCN); the appellants' acceptance that they availed bogus Cenvat credit and reversal of following amounts, confirms fraudulent availment. TABLE Reversal Challan Total Sunrise Textiles, Surat 16,48,434 1,500,000 31,48,434 Fastwave Trading Co. Pvt Ltd., Mumbai 12,56,730 12,56,730 Beauty Fashion 14,83,406 14,83,406 Shree Nathaji Textiles 16,81,082 16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. Brief issues that requires to be decided in these cases are: (i) As to whether the appellants are eligible to CENVAT Credit even after revocation of Rule 12B of Central Excise Rules with effect from 9.7.2004; (ii) Whether the corrigendum/addendum dated 17.9.2007 to the show-cause notice is valid in law; (iii) Whether the appellant i.e., M/s. Venus International have availed credit on the basis of bogus invoices and if so, whether they have rendered themselves to pay CENVAT credit thus availed; (iv) Whether penalties are imposable on different appellants; and (v) Whether the Revenue appeal is sustainable. 15. Coming to the first issue, show-cause notice dated 9.8.2005 was issued to be appellant M/s. Venus International on the ground that though vide Notification No. 11/2004-CE (NT) dated 9.7.2004, Rule 12B has been rescinded, the appellants continued to avail CENVAT credit of Rs. 2,88,89,873/- and the same is not available to the appellants. We find that Rule 12B empowered non-manufacturer to get specified textile and textile articles produced or manufactured on his account on job work basis subject to observance of conditions and procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the omission of Rule 12B of Central Excise Rules, 2002, the firm can clear goods lying with them under an invoice after paying Central Excise Duty as per law . 5. It can be seen from the above reproduced portion of the Board Circular that the trader can discharge the duty liability on the goods, which were received by him prior to 9-7-2004. It is not clear in this case whether such goods, duty was paid on the goods invoiced to appellant, on which credit was availed were in fact received by the trader prior to 9-7-2004. If the trader issues an invoice of 18-8-2004, it has to be presumed that the Excise registration certificate issued to him was valid. If that be so, the issue needs to be considered from this angle also. In the absence of any findings on these points, we set aside both the orders of lower authorities and remand the matter back to the adjudicating authority to re-consider the issue afresh after following the principles of natural justice. We allow the appeal by way of remand. In the case of Suntex Mercantile Pvt. Ltd.: 2014 (313) ELT 809 (Tri.-Mumbai) has held: 6 . On careful consideration of the submissions made by both the sides, I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d some investigations on the credit availed by the appellants and have come to a conclusion that the appellants have availed CENVAT credit of Rs. 1,21,61,218/- on the strength of bogus invoices/invoices issued by non-existent parties/invoices issued without any actual movement of goods and that the cheques issued to the 13 suppliers of raw materials i.e., grey fabrics have been discounted/withdrawn by third parties who have no connection with the suppliers. On completion of investigation, an addendum dated 17.9.2007 was issued. It is contention of the appellants that the addendum is beyond the scope of the original show-cause notice and therefore, cannot be issued as an addendum. Moreover, the same is time barred. It is the contention of the department that though an addendum has been issued, it is in consonance with the basic issue raised in the show-cause notice i.e., admissibility of CENVAT credit; the addendum supplements the basis of holding the inadmissibility of credit and in no way increases the liability of the appellant. 21. We find that the contention of the department is acceptable. It is not the appellant's claim that the original show-cause notice and the adden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Weizmann Ltd. and Others 2016-TIOL-505-CESTAT-MUM confirmed that both the above units viz. Sajjan Textiles and Shreeman textiles did not manufacture any grey fabrics and the transactions of sale of grey fabrics to various processors or merchant exporters were only on invoices purportedly indicating payment of duty, which were used by processors and merchant exporters and that the whole exercise was conducted to encash the duty in the form of rebate. (iv). When investigations were conducted, the appellants claimed that their material purchased from M/s. Shreenathji Textiles, Surat, M/s. Sushma Fabrics, M/s. Beauty Fashion, Surat was returned and credit was revered. (v). In case of (i) M/s. Parul Textiles, Surat (ii) M/s. Arvind Textiles, Surat, (iii) M/s. SVS Tex-o-Fab, Surat (iv) M/s. Charmi Creations, Bhiwandi (v) M/s. K.P. Textiles, Bhiwandi, (vi) M/s. Kevin Synthetics, Bhiwandi could not be located at their shown addresses. (vi). M/s. Star Enterprises and M/s. Subhalxmi Trading did not exist at the given address. M/s. Suraj Textiles' address turned out to be of Shri Shaikh Basher, Scrap dealer who clarified that there was no Suraj Textiles. Thus, the Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reasonable steps if he satisfies himself about the identity and address of the manufacturer or supplier or provider of input service, as the case may be, issuing the document specified in sub-rule (1) evidencing the payment of excise duty or the additional duty of customs or service tax, as the case may be, either - (a) ............................ (b) on the basis of the certificate given by a person with whose handwriting or signature he is familiar; or (c) on the basis of certificate issued to the manufacturer or the supplier or, as the case may be, the provider of input service by the Superintendent of Central Excise within whose jurisdiction such manufacturer has his factory or such supplier or provider of output service has his place of business or where the provider of input service has paid the service tax and where the identity and address of the manufacturer or the supplier or the provider of input service is satisfied on the basis of a certificate, the manufacturer or producer or provider of output service taking the CENVAT credit or input service distributor distributing CENVAT credit shall retain such certificate for production before the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned is barred by limitation as there was no suppression or mis-declaration or mis-statement with an intent to evade payment of duty on their part; they have been submitting ER-1 returns incorporating the details of credit; the department could have verified the same; the issue raised in addendum could have been dealt in separate show-cause notice rather than by an addendum. We find that Revenue has contended that the addendum dated 17.09.2007 issued on the basis of further investigation, proved that the appellants availed fraudulent Cenvat credit; the issue in the show cause notice and addendum was same i.e. disallowance of Cenvat credit; No additional demand has been issued by addendum; investigation proved that the appellant continued to work in the status/capacity of manufacturer under erstwhile Rule 12B only with an intention to avail fraudulent Cenvat credit and to claim fraudulent rebate; As fraud was involved in the matter, the show cause notice correctly invoked proviso to Section 11; the addendum also was issued well within the time of 5 years. We are of the considered opinion that the department has correctly invoked the extended period. For this reason, we find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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