TMI Blog2010 (6) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacturer/importer. 1.2 These three appeals arise out of common impugned order and are accordingly, dealt with by a common order. 2. Heard both sides. 3. The relevant facts, in brief, are as follows :- (a) M/s. Sulabh Impex Incorporation (hereinafter referred to as importer) with an Import and Export Code Number was in import business. M/s. Sulabh Impex Incorporation a proprietary concern with proprietor Shri Sunil Kumar Mittal. Shri Alok Jain was in the business as a broker of metal scrap on commission basis. Investigation by the officers revealed that Shri Sunil Kumar Mittal issued invoices in favour of the registered dealers but no goods were not supplied by the said M/s. Sulabh Impex Incorporation. The broker Shri Alok Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered dealers. On appeal by the parties, the Commissioner upheld the order of the original authority. 4.1 Learned Advocate submits that there is no evidence that the Registered dealers were aware of fake nature of bill of entries produced by the importer. The Manufacturer is not required to question the transaction between the importer and the Registered dealers. The Manufacturer has taken the credit based on the documents given by the Registered Dealers along with the goods. He seeks setting aside the demand and penalties on these appellants. 4.2 He also relies on the guidelines issued by Central Board of Excise and Customs Circular No. 766/82/2003-CX., dated 15-12-2003 to submit that non-payment of duty at the end of supplier i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered dealers in the present case have failed in their obligation. 6. I have carefully considered the submissions from both sides. It is clearly emerging that the consignments on which the appellant manufacturer has taken credit was not actually imported by M/s. Sulabh Impex Incorporation. The basic documents namely, the Bills of Entry were admitted to be a fake ones and therefore, the question of passing on any credit based on such fake documents does not arise. The broker Shri Alok Jain has in his statement dated 23-3-2006 has also admitted that Shri Sunil Kumar Mittal, proprietor of M/s. Sulabh Impex Incorporation only supplied the documents. On receipt of payment against the invoices issued by the Importer, it was submitted that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dealers as the Bills of Entry which were produced as the duty paying documents were found to be fake. The registered dealers do not have the right to pass on the credit relying on said fake bill of entry, after all, fraud vitiates any transaction. The registered dealers having no right to pass on the credit, the question of validity of the credit taken by the Manufacturer does not arise. 7. However, the evidence on record do not show that the registered dealers and the manufacturer were in the knowledge of fraud committed by M/s. Shobit Impex Incorporation. It is stated that separate action has been initiated against M/s. Shobit Impex Incorporation and Shri Alok Jain, the broker. 8. The guidelines of the Board dated 15-12-03 refers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered dealers have not received the goods with proper duty paying documents. The goods were procured from other sources. There is no correlation between the document supplied by the Importer and the goods arranged by the broker. The credit passed on by the registered dealers was irregular and therefore, the credit taken by the manufacturer is not legal and proper. (2) However, there is no evidence that the two registered dealers and the manufacture are aware of the fabrication of bill of entry as duty paying documents. They have acted bona fide. Therefore, penalties on them are not sustainable. 10. In view of the above, the appeals are disposed of as follows with consequential relief as per law :- (a) Appeal No. 1117/2008 of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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