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2014 (7) TMI 356 - CESTAT NEW DELHICENVAT Credit - paper transaction to enable fake credit - Equivalent penalty - Held that:- The view of Commissioner (Appeals) holding that in view of payment of invoice price has been made by the dealer and such payment has been made through banking channel and of passing of the credit by such dealer on valid invoices could not be disputed are not correct. - His observation that the appellant have taken due care while procuring the duty paid inputs and Cenvat credit on such invoices cannot be denied simply on the ground that invoices were issued by the dealer fraudulently, is also not acceptable. Once the fraud is involved, it vitiates the transactions and no benefit can accrue on such invoices. Commissioner (Appeals)’s finding that credit will be available even fraud at dealer stage is involved is not acceptable at all. Sachin Aggarwanshi floated the company to undertake paper transactions and these paper transactions have been proved by the confessional statements. It also came out that all these Central Excise transactions have been organized in such a way to facilitate illegal availment of credit by M/s Ved Trading Company. The role of Sachin in this fraudulent activity is clearly manifested. His subsequent actions and behavior in prolonging investigation and non-cooperation with the Department and later taking recourse to the legal forums to contest the Department s allegations have proved false as nothing substantive was found by the Police authorities who later closed the investigation. Mr. Sachin clearly became liable for penal action for executing fraudulent activities. Further investigations have clearly brought out that the paper transactions have taken place without actual movement of goods and credit has been passed on fraudulently. Such illegally availed credit requires to be reversed back along with penal action as whole fraud has been pre-mediated and executed with the sole intent to defraud the revenue. - Decided in favour of Revenue.
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