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2013 (9) TMI 415 - AT - Central ExciseCENAVT credit - Credit availed based on only Invoices - Reasonable steps - Fraudulent Transmission of Cenvat Credit - Penalty - appellants strongly contended that the fact that M/s. Itisha was not paying duty, as reflected in the invoices issued by him, came to fore only as a result of investigations conducted by the Revenue. The said appellants have also been the victim of fraud committed by M/s. Itisha and as such, they should not be penalized. In fact, it stand specifically contended before us that neither of the manufacturer-appellant or their representative has admitted in the statements recorded during the course of investigations that they were aware of the fact of non-payment of duty by M/s. Itisha. It was pleaded that by making to reverse the Cenvat credit, they have already been penalized and further imposition of penalty on them is not justified. It is to be noted that though the provisions of Rule 7 of Cenvat Credit Rules, 2004 cannot be stretched too far, at the same time, it was the preliminary duty of the manufacturing unit to at least verify the fact of the manufacturing unit who has supplied the goods to them. Be that as it may, since it has been proved beyond doubt that the manufacturer as well as the manufacturing unit have availed Cenvat credit based on only documents and reversal thereof is not seriously challenged, it would amount to availment of Cenvat credit wrongly in contravention of provision of Cenvat Credit Rules. It is also not disputed that the extended period of limitation will apply in this case as the entire modus operandi of passing on the credit by M/s. Itisha, without having manufacturing unit, only on documentary evidence and even without paying the same to Government of India, has been un-earthed after detailed investigation, a fraud committed by M/s. Itisha. It is well settled that fraud vitiates everything and disadvantage of such fraud cannot be taken by anyone. Once there is no dispute as regards ineligible Cenvat credit availed by the manufacturers and manufacturing units and the same being reversed on being pointed out, the penalties on the manufacturing unit and the manufacturer under the provisions of Rule 15 of Cenvat Credit Rules, 2004 are correctly fastened on them. The manufacturers/manufacturing units cannot shirk away from the responsibility of availing the ineligible Cenvat credit on the face of it. All the defences raised by the ld. Counsel for appellants are very weak on the face of it. - Decided against the assessee by majority order.
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