TMI Blog2004 (9) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... te and M/s. Ekta Enterprises, a registered dealer had indulged in fraudulent misuse of Modvat credit. 2. During investigations, all the above firms were visited and searched including their officers Shri Ashish V. Trivedi, Director of M/s. SGMCPL, Shri Jitendra D. Bhatt, CMD of M/s. JACL and Smt. Ekta V. Trivedi (C/o Shri Ashish V. Trivedi) Proprietor of M/s. Ekta Enterprises. The concerned persons were interrogated and their statements were recorded. Besides, there were several other firms and persons who were searched/interrogated during the investigations, amongst them were the following : (i) M/s. Bleach Chem Ahmedabad (ii) M/s. Ekta Metals and Chemicals Pvt. Ltd. (iii) M/s. Sarika Paints Ltd. (iv) Shri Kayurbhai S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions. All other firms and persons, as mentioned hereinabove, were also found to be involved in similar paper transactions i.e. taking Modvat credit in their records on the basis of invoices without receiving any goods and then issuing their own modvatable invoices to pass on the said credit to their buyers. All these persons confessed having indulged in these types of activities and admitted having carried out such transactions only on paper. Interestingly, however each one of them stated that they were doing this as per the directions of Shri Jitendra D. Bhatt, CMD of M/s. JACL, which position Shri Bhatt also admitted in his statements. 5. To understand that nature of these transactions and as to how they were being carried out, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods as if they were clearing the finished goods on payment of Excise duty. They utilized Rs. 1,27,10,724/- of the Modvat credit and passed it on to their buyers namely (i) M/s. Ekta Enterprises, (ii) M/s. Ekta Metals and Chemicals Pvt. Ltd. (iii) M/s. Sarika Paints. All these three firms, being registered dealers took credit of the said amount in their records and issued their own invoices in favour of M/s. JACL of varying amounts. On the basis of these invoices M/s. JACL took the Modvat credit. (iv) M/s. JACL issued Central Excise duty paid invoices to the dealer M/s. Ekta Enterprises, who took Modvat credit of the duty paid amount in their records. Then passed on the said credit to M/s. Sarika Paints, M/s. SGMCPL and also to M/s. JA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Paints for getting benefits from Banks and other financial Institutions. Curiously, however, the impugned order is silent about any proceeding having been initiated against M/s. JACL and M/s. Sarika Paints and their Directors. Vide the impugned order, the ld. Commissioner has - (i) disallowed Modvat credit of Rs. 1,33,66,487.52 to M/s. SGMCPL and demanded duty amounting to Rs. 1,27,10,724/- from there under the provisions of Section 11A(1) of Central Excise Act, 1944 read with Rule 57-I (i) (ii) of Central Excise Rules. (ii) Imposed penalty of Rs. 1,27,10,724/- under Section 11AC of the Act read with Rule 57-I (4) and Rule 173Q(1) of the rules and Rs. 5,00,000/- under Rule 226 of the rules on M/s. SGMCPL. (iii) Ordered rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise duty is being demanded from them on the goods manufactured and cleared by them. Admittedly when there was no manufacturing facility available with M/s. SGMCPL and no manufacturing activity was carried out by them there was no question of manufacturing and clearing any excisable goods by them. They were therefore neither eligible to take any credit on the inputs nor were obliged to pay any Central Excise duty on the non-existent finished goods. Whatever amount of Modvat credit they have taken in records was used to pay Central Excise duty for clearance of these non-existent goods. Therefore, the appellants are only challenging the duty demand and not the denial of Modvat credit. Since the demand of duty relates to the excisa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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