2011 (6) TMI 315 - HC - Central Excise

Rebate claim - The brother of Shri Anuj Murarilal Agarwal stated that all the firms in question namely Namaste Exports Daffodils Exports and Prime Exports were functioning from the same premises and whose operations were looked after by him - The Commissioner entered several findings of fact including interalia that no payments were made to the Muni Group and that merely for the purposes of accounts payments were shown in the Ledger though no payments were made - The payments which were made were found to have been received back in cash - The Commissioner noticed that the representative of the merchant exporter whose statements were recorded during the course of investigation had never seen the factory premises of Muni group at any time - A penalty of 50 lacs was imposed on Ayush Murarilal Agarwal proprietor of Namaste Exports authorized signatory and brother of Anuj Murarilal Agarwal proprietor of Prime Exports and authorized signatory and son of Murarilal Agarwal proprietor of Daffodils Exports - set aside the impugned order dated 9 February 2010 and restore the Revision Application for reconsideration.

Summary

Issues:
1. Claim for rebate under Section 35EE of the Central Excise Act, 1944 allowed by Revisional Authority.
2. Allegations of fraudulent Cenvat credit and rebate claims against the exporter.
3. Dispute regarding the arms-length nature and bonafides of the transactions.
4. Challenge to the findings of the Revisional Authority.
5. Consideration of material on record for fresh reconsideration.

Analysis:

Issue 1: Claim for rebate allowed by Revisional Authority
The Petition by the Union of India challenged the order allowing the rebate claim by the Respondent under Section 35EE of the Central Excise Act, 1944. The Court remanded the proceedings back to the Revisional Authority for reconsideration in a batch of petitions.

Issue 2: Allegations of fraudulent Cenvat credit and rebate claims
The First Respondent, a merchant exporter, faced allegations of availing fraudulent Cenvat credit and claiming rebates against goods exported. The rejection of the rebate claim by the Assistant Commissioner and Commissioner (Appeals) was overturned by the Revisional Authority in the impugned order dated 9 February 2010.

Issue 3: Dispute over transaction nature and bonafides
The Petitioner argued that the Revisional Authority's assumption of no lack of bonafides in the transaction was incorrect. The Petitioner relied on findings and an order detailing fraudulent activities related to rebate claims. The Respondent contended that the Revisional Authority's findings were justified and the additional order was not considered during the decision-making process.

Issue 4: Challenge to Revisional Authority's findings
The Revisional Authority's order highlighted the absence of allegations against the exporter regarding the transaction's arms-length nature or bonafides. The Court found merit in the Petitioner's contention that this assumption was factually incorrect based on evidence of fraudulent activities and lack of genuine transactions.

Issue 5: Consideration of material for fresh reconsideration
The Court set aside the Revisional Authority's order, citing a misdirection and the need for a fresh review considering all evidence on record. The Court clarified that no opinion on the merits was expressed, leaving the decision to the Revisional Authority for a comprehensive reconsideration.

In conclusion, the High Court Bombay High Court's judgment involved a detailed analysis of the rebate claim, allegations of fraudulent activities, the nature of transactions, challenges to the Revisional Authority's findings, and the need for a fresh review based on all available evidence.