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2015 (10) TMI 1567 - CESTAT MUMBAI

2015 (10) TMI 1567 - CESTAT MUMBAI - TMI - Denial of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of goods - Violation of principle of natural justice - Opportunity of cross examination not granted - Held that:- there are direct allegations against the appellants and therefore, their involvement cannot be ruled out. In the circumstances the benefit of the aforesaid decision of the Hon’ble High Court [2013 (5) TMI 705 - GUJARAT HIGH COURT] cannot be extended to the ap .....

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case need to be given. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee. - APPEAL No.E/1199 to 1201, 1233, 1234 & 2158/10 With E/MA(Ors)/1447/2011-Mum - Dated:- 8-9-2015 - Mr.Anil Choudhary, Member (Judicial) And Mr. Raju, Member (Technical) For the petitioner : Shri.K.R. Bulchandani & Shri Navin Gheewala Advocate For the Respondent : Shri.V.K.Singh, Spl. Counsel ORDER Per: Raju 1. The Appellants, (M/s. Accelerate Synthetics Pvt. Ltd.) are registered as m .....

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, without receiving the goods. Thus an alert circular was issued by the Surat Commissionerate. 2. In the said alert circular it was noticed that some of those allegedly bogus parties had issued invoices in the name of appellants (M/s. Accelerate Synthetics Pvt. Ltd) and therefore investigations started against the appellants. As a part of investigations a number of statements of the Proprietor and employees of the appellant were recorded. Statements of number of yarn suppliers and brokers were a .....

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der to justify taking of credit v) They have filed incorrect return wrongfully depicting receipt of inputs 3. One of the alleged suppliers of fake invoices to the appellant is M/s.Shiv Trading Company. It will be pertinent to mention here that in a case decided by this Tribunal in the case of Shir Kashinath Das (Proprietor Shiv Trading Co.) Vs. CCE, Mumbai, vide order No.A/376/14/EB/C-II dated 20/05/2014 following has been stated by Shri Kashinath Das (Proprietor of Shiv Trading Co.): (i) He had .....

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the appellant, no business transaction took place. (v) The bank account No. shown in the application for registration is a personal account with Punjab & Maharashtra Bank. (vi) Registration of Shiv Trading Company was surrendered on 21.7.2004, as no activity had taken place, only return for the period of registration was filed. (vii) As regards two rubber stamps found in the course of search in the name of J.P. Textiles, it was stated that it was a proposed firm, which was never opened. (v .....

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he best of his knowledge. It was further categorically stated that the signature appearing on the 24 invoices purportedly issued in favour of M/s Accelerated Synthetics Pvt. Ltd. are not the signature of Shri Kashinath Das and the same appear to be forged. It was further stated that Shri Kashinath Das does not know any person by the name of Sudhir Bhimrajka or Tulsidas Goyal or Leo Fernando. 4. This Tribunal in that case has given following findings: 7. Having considered the rival contentions, w .....

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Surat. No enquiry has been made with the printer as to who got the stationery printed. Further, the appellant had stated that he had obtained the registration under Central Excise on being inspired by one Chandubhai Patel of Surat, who has also admitted in his statement before the Revenue authorities that he had also registered one firm at Surat with the Excise Department in similar name of Shiv Trading Company. The said Chandubhai Patel has been found to be involved in the issue of bogus CENV .....

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een followed as no cross-examination has been allowed. It was argued that each and every imputation raised in the notice is based on the statements recorded during investigation. It was argued that the appellants had been denied cross-examination wrongfully. It was also argued that the appellants were not heard on merits and the matter needs to be remanded for fresh adjudication after allowing cross-examination of the witnesses and the personal hearing to the applicants to enable them to produce .....

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uashed as time-barred. The appellants argued that the show cause notice does not allege any wrongdoing on the part of appellants and if any fraud has been committed by the sellers of the yarn then they cannot be blamed for any misdeclaration or fraud. They argued that since there is no allegation of any fraud or misdeclaration against them extended period of limitation cannot be invoked in view of the decision of Honble High Court of Gujarat (supra). Learned Counsel Shri Bulchandani argued at l .....

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. in respect of which penalty has been imposed on his client are also the subject matter in a different proceeding, which has already been adjudicated by the Surat Commissionerate. He argued that since the matter pertaining to these very invoice numbers has already been adjudicated in a different proceeding the same cannot be done again in the present proceedings. 8. The learned AR argued that the receipt of goods has been disputed in the present case and hence the facts of the present case are .....

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r suppliers of yarn. 9. It is apparent that the principle of natural justice has not been followed in so much as no final hearing has been given and cross-examination has been denied without assigning any reasons. However it is seen that in the case of Prayagraj dying and printing mills, Hon ble High Court of Gujarat had observed that since in that case there was no allegation of mensrea on the part of the appellants in that case, the Tribunal was wrong in remanding the matter to the lower autho .....

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issued. The Department has also alleged that all the money given to yarn dealers or manufacturers has been received back in cash through brokers or agents. It has been alleged by the revenue that the appellants have actively connived in the entire operation and their manager has also confessed the same during investigations. The learned counsel for appellant had however argued that the confession was obtained under duress and was retracted immediately. 11. In the case of Prayagraj dying and prin .....

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the original manufacturer is now not traceable, is sufficient for reversal of Cenvat credit already taken by the appellants by virtue of the original invoices. However, at the same time, we find substance in the contention of Mr.Oza and Mr.Champaneri, the learned Counsel appearing on behalf of the Revenue, that in order to get the credit of Cenvat Rule 7 (2) cast a further duty upon the appellants to take all reasonable steps to ensure that the inputs or the capital goods in respect of which th .....

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hold that the said decision supports the case of the Revenue and taking of all reasonable steps as provided in Rule 7 (2) is an essential condition of availing the credit. The distinction sought to be made by Mr.Parikh that the period involved therein related to June, 2003 is not tenable because sub-rule (e) of Rule 7 was introduced even earlier with effect from April 1, 2013. 12. The next question is whether demand of reversal is barred by the period of limitation. In our opinion, in view of ou .....

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he Revenue that the transferees were party to any fraud and therefore, the Revenue cannot rely upon a larger period of limitation. Our aforesaid view finds support from the following decisions of the Supreme Court: i) CCE Vs/ Chemphar Drugs & Liniments, reported in 1989 (40) ELT 276. ii) Padmini Products Vs. CCE, reported in 1989 (43) ELT 195 iii) Lubrichem Industries Ltd. Vs. CCE, Bombay reported in 1994 (73) ELT 257. iv) Nesle (India) Ltd. Vs. CCE Chandigarh reported in 2009 (235) ELT 577 .....

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er to the decision of the Supreme Court in the case of Commissioner of Central Excise, Belapur Vs. E. Merck India Ltd., reported in 2009 (238) ELT 386 (SC) where the Supreme Court took a view that in the absence of a willful misdeclaration on the part of the respondent assessee, there was no scope of invoking Section 11A of the Act. 12. It can be seen that the Hon ble High Court has given the decision in a case where there was no allegation on the person being charged of any involvement in creat .....

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are substantially different from the facts in the case before the Hon ble High Court of Gujarat. The learned Counsel for the appellants argued that the decision of Hon ble High Court of Gujarat was based on the facts in the case of Prayagraj dying and printing mills and others, and in that case the receipt of goods was not challenged. He argued that among the group of appeals before Hon ble High Court of Gujarat, there was also an appeal of M/s Asha traders. In the case of Asha Traders the recei .....

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