TMI Blog2013 (4) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicates the likelihood of the allegations of the duty evasion being upheld and if there is slightest risk to the Revenue, the dispensation from the provisions of Section 35F should not be given and if it has to be given the stiff conditions have to be imposed to safeguard the interests of the Revenue. If the allegation against appellant of having issued bogus invoices are proved, the allegations against other appellant of having availed Cenvat credit in a fraudulent manner would also stand proved. In view of these circumstances, we are of the view that this is not the case for total waiver. - Appeal No.2729-2732 of 2011, 2834 of 2011, 3013-3015 of 2011 - - - Dated:- 28-6-2012 - Ajit Bharihoke And Rakesh Kumar, JJ. Appellants Rep by: Shri R Sudhinder, Adv. for M/s SMI Electrowire Pvt Ltd, Shri Roopesh Kumar Gaur, Account And Shri Pramod Kumar Gupta, Director, Shri R K Hasija, Adv for M/s V K Metal Works, Shri Prabhat Kumar, Adv. for M/s Kanpur Kashmir Roadways Ganpati Rollings Pvt Ltd, M/s Upkar Goods Transport Co. Pvt Ltd And M/s J V Industries Pvt Ltd Respondent Rep by: Shri R K Verma, AR (DR) Per: Rakesh Kumar: All these appeals arise out of order-in-ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny copper ingots had been manufactured by them nor any copper ingots had been sold by them to anybody including SMI and only bogus invoices had been issued by SMI showing the sale of copper ingots without actual supply of any material, as in course of inquiry, the statement dated 21/1/09 of Shri Shankar Lal Gupta, Authorised Signatory of VKM was recorded, wherein he categorically stated that in their factory no production used to take place and only bogus invoices had been issued and the same had been sent without any goods. With regard to supply of copper scrap to VKM, the department made inquiries with Shri Devender Kumar Jain, Proprietor of M/s Vikas Traders, Bhiwadi, who in his statement dated 4/1/08 stated that he was only issuing the invoices as per the instructions of one Shri Deepak Agarwal for which he used to get commission of Rs. 60/- per M.T. and that he had neither supplied copper scrap nor he had received any copper scrap. VKM being a unit located in the notified exempted area in the J K were availing of duty exemption under Notification No.56/2002-CE under which every month they were paying duty on the copper ingots claimed to have been manufactured by them through C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- was imposed on M/s Ganpati and M/s JVI. 1.3 Against the above order of the Commissioner, these appeals alongwith stay applications have been filed. 2. Heard both the sides in respect of stay applications. 3. Shri R. Sudhinder, Advocate, the learned Counsel representing SMI, Shri Roopesh Kumar Gaur and Shri Pramod Kumar Gupta, pleaded that the allegations against the SMI are based on the allegation against VKM that there was no manufacturing activity in their Factory at Jammu and they have issued only bogus invoices, that in this regard the department has issued a separate show cause notice dated 5/1/10 to VKM seeking denial of exemption under Notification No. 56/2002-CE to them, and also seeking recovery of erroneously given refund to them, that this show cause notice is still pending adjudication, that in view of this, the proceedings against SMI, their Director and Accountant are pre-mature, that there is no evidence in support of department's allegation that VKM have issued bogus invoices, that on the contrary ST-38 forms indicate that copper ingots had, indeed, been supplied by VKM, that the reports of the Jurisdictional Central Excise officers confirmed that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them by the Commissioner, Central Excise, Delhi - IV is absolutely incorrect. He, therefore, pleaded that VKM have a strong prima facie case and, hence, the requirement of pre-deposit of penalty may be waived and recovery thereof stayed till the disposal of the appeal. 5. Shri Prabhat Kumar, Advocate, the learned Counsel representing KKR, UGT, Ganpati and JVI pleaded that the allegations against these appellants are linked with the allegation against VKM that they had issued bogus invoices without actually supplying any material, that show cause notice issued by CCE, Jammu containing this allegation is yet to be adjudicated and, therefore, based on such allegation, the proceedings against these appellants are pre-mature, that in any case the evidence on record indicates that the goods had actually been supplied by VKM, that the appellant have a strong prima facie case and, hence, the requirement of pre-deposit of penalty imposed on them may be waived for hearing of their appeals and recovery thereof may be stayed. 6. Shri R.K. Verma, the learned Departmental Representative, opposing the stay applications pleaded that this is a well organised fraud under which the invoices had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit of Rs. 90,63,072 /- had been taken by SMI in a fraudulent manner. He, pleaded that in view of these circumstances, this is not the case for waiver of the requirement of pre-deposit. 7. We have carefully considered the submissions from both the sides and perused the record. 8. The point to be decided in these applications is as to whether the appellant's applications for waiver from the requirement of pre-deposit under Section 35F of the Central Excise Act, 1944 can be accepted. As per the provisions of Section 35F where in any appeal, the decision or order appealed against relates to any duty or Cenvat credit demand in respect of any goods which are not under the control of Cenvat credit authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the Adjudicating Authority the duty demanded or the penalty levied. The proviso to this Section provides for waiver of the requirement of pre-deposit in the cases where the appellate authority is satisfied that-the requirement of pre-deposit would cause undue hardship and in such a case the dispensation with regard to the requirement of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce would be in favour of granting waiver and stay if the case against the appellant assessee has no legs to stand or the issue involved stands decided by the judgments of the Apex Court, High Courts, or Tribunal in his favour, as in such a situation, compliance with the requirement of pre-deposit before hearing of appeal would certainly cause undue hardship and irreparable loss. Same view has been taken by Hon'ble Delhi High Court in case of Sri Krishna vs. UOI reported in 1998 (104) E.L.T. - 325 (Del.) wherein the Hon'ble High Court has held that if the appellant has such a prima facie strong case as is most likely to exonerate him from payment, the requirement of pre-deposit would cause undue hardship. A corollary to this principle would be that when the situation is reverse, the pre-deposit must be insisted. Thus when the issue involved in the appeal stands decided in favour of the Revenue by the judgments of the Apex Court/High Court/Tribunal or on the basis of evidence on record, there is strong prima facie case against the assessee, granting waiver would cause irreparable damage to the interests of the Revenue and the balance of convenience would be against granting the waive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified goods by availing duty exemption under this Notification, his customers located anywhere in India would be eligible for Cenvat credit in respect of such goods as if the goods have suffered normal duty without any exemption. It is this scheme which acts as an incentive for an unscrupulous manufacturer located in the specified areas of the State of J K and availing exemption under Notification No.56/2002-CE to inflate his production and, hence, duty payment (by issuing bogus invoices), which after deducting the Cenvat credit available, is refunded to him, as his customer would be eligible for Cenvat credit as if the goods had been cleared on payment of normal duty without any exemption. 11. In this case, the allegation against VKM is that during the period from December 2004 to December 2006 they have shown duty payment through PLA to the tune of about Rs. 42.37 crores, which has been refunded to him under Notification No. 56/2002-CE, while actually there was no manufacturing and no sale. This indicates that VKM had issued invoices passing on Cenvat credit of more than Rs. 42 crores, as the total duty payment on copper ingots claimed to have been manufactured and cleare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his statement dated 22/1/09, this retraction being a bald retraction has no meaning, as no evidence has been produced by him from which it would appear that his statement had been recorded under duress, coercion or inducement. It is well settled that a statement recorded under Section 14 of the Central Excise Act, 1944 by Gazetted Officer is admissible as evidence unless there is evidence indicating that the same is hit by the provisions of Section 24 of Evidence Act. Though there are reports of the Jurisdictional Central Excise officers supporting the claim of VKM that they were actually manufacturing and selling the copper ingots, the evidence on record as discussed above, indicates to the contrary and therefore, in our view, no credibility can be attached to these reports. It is also pleaded that issue of ST-38 forms at Delhi - Haryana border check-post shows the receipt of the goods by SMI. But in our view ST-38 form cannot be treated as evidence of receipt of the goods, as while issue of form ST-38 at the check-post there is no physical verification of the goods loaded in the truck. 12. In view of these circumstances, though the show cause notice issued to VKM by then Commi ..... 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