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TMI Blog2013 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Tariff Act, 1985. Their factory was visited by the central excise officers on 7.2.2003, who conducted the various checks and verification. As a result, it came to the notice of the officers, that the appellants have been showing the purchase of PVC compound (raw material) from one M/s.Aggarwal Plastic (India) and were availing the benefit of modvat credit paid thereon. However, it came to light that M/s.Aggarwal Plastic (India) stopped their manufacturing activities since January, 2002, and were issuing fake invoices of PVC compound and were passing on non-admissible credit to M/s.Satvik Industries. As a result, on further investigation, the statements of various persons were recorded. The department found that the machines installed in the factory premises of M/s.Satvik Industries, and the number of employees were insufficient to manufacture the PVC insulated wire and winding wire of copper that is their final products. Accordingly a belief was entertained by the Revenue that the said appellant was procuring invoices of the raw material only without actually receiving the raw materials and were issuing invoices of their final products showing the sale of the same, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id appellant had not manufactured final products. As such, it can be prima facie concluded that there was no liability on the part of the said appellant to pay excise duty. In such a scenario, the credit so availed by them was not available for payment of duty on the final products, and utilization of the same, for payment of duty on the final products, which were not actually manufactured by them and their being no legal obligation on the part of the said appellant to pay duty, can be said to be reversal of the credit. For the above position, reliance by the learned Advocate on the Tribunal's decisions in the case of Cromption Greaves Ltd. vs. CCE, Mumbai-III-2008 (87) RLT 182 (Tri.-Mum.) as also in the case of Vickers System International Ltd. vs. CCE, Pune-I-2008 (85) RLT 492 (Tri.-Mum.) are appropriate. It stands held in the above decisions that the modvat credit availed on the inputs which were further used for payment of duty, though, no excise duty was leviable and was required to be paid, can be held to be reversal of the credit. Any demand for further recovery of inadmissible credit is not sustainable. 7. We may also take into consideration the decision of the Hon'ble Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an amount of Rs.30 lakhs (Rupees thirty lakh) towards penalty within eight weeks from the date of pronouncement of the order. The matter to come up ascertaining compliance on --------. 11. As regards the stay petition of M/s.Genuis Electrical & Electronics (P) Ltd., we find that they have deposited the entire amount of duty of Rs.16 lakhs approximately confirmed against them. By treating the same as sufficient for the purpose of section 35F, we dispense with condition of pre-deposit of penalty imposed upon them and allow their stay petition accordingly. 12. Both the stay petitions are disposed of in the above manner. (Pronounced in the open court on -------) Archana Wadhwa, Member (J) Mathew John, Member (T) 13. I have gone through the order recorded by Member (Judicial). I am not in agreement with one of the main observations in the order recorded by Member (Judicial). Since this matter has general applicability, I consider it necessary to record my views even though the matter is presently listed for stay purpose only. So I am recording this separate order. 14. My disagreement is with the axiom that issuing invoices showing utilization of wrong Cenvat credit taken is equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act. When genuine credit is used the tax element is already deposited by the person who supplied the input. So section 11D gets complied by filing of return. When fraudulent credit is used the money has never come into the exchequer and the provisions of section 11D will apply. 17. Thus "reversal of credit" in the first two situations and the third situation are totally different. There are some decisions of the Tribunal and the Courts saying that after reversal of credit there is no case for further recovery of credit taken. Some of these decisions are cited by the appellant and by Member (Judicial). These are,- (a) Crompton Greaves Ltd Vs. CCE-2008 (87) RLT 182 (Tri-Mum); The facts of the case were that the assesse had taken Cenvat credit of duty paid on essential spares of transformer which was cleared along with the transformer on payment of duty using the credit taken. The dispute was whether spares were part of transformer on which credit could have been taken. The decision is to the effect even if the credit could not have been taken, the credit taken gets reversed when the impugned spares are cleared showing duty payment using the credit taken. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rods. During certain period there was an issue whether the process amounted to manufacture and for that reason credit might have been denied after accepting duty payment on final products. In this situation there could be no case that the credit passed on had never come in to the exchequer. 19. Now the above decisions are being interpreted to mean that a person who makes credit entries in his account based on fraudulent invoices or on the basis of no invoices at all, can square up the fraudulent credit entries by issuing invoices showing payment of excise duty from such credit account. To my mind this this is just an interpretation of a decision and not the legal position and this interpretation will give legal sanction to manufacturing of credit out of no payments into the exchequer and damage the interest of Revenue beyond repair. 20. Now the argument to be examined is that the appellants have paid duty on the final products manufactured and filed excise returns and hence no demand is sustainable. There are two possibilities to be considered in this context. These are,- (i) the appellant procured non duty paid PVC compound and covered it with fraudulent inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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