TaxTMI 
TaxTMI 
2016 (12) TMI 216
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....erochem and Aerochem Impex, Hyderabad, covering consignments of Acetonitrile and THF respectively. (b) The DGCEI's Hyderabad Regional Unit investigating the said dealer's transactions in a different case, concluded inter alia, that the dealer (Aerochem Impex) colluded with M/s YM Drugs, Nalgonda, to generate fake invoices without physical movement of goods for the purpose of passing on credit fraudulently; that the cited two invoices though issued to the appellant firm, there was no physical transit of goods covered therein; that hence the credit availed by the appellant firm is irregular, meriting recovery with interest and penalty on the firm. (c) The following conclusions were drawn by DGCEI upon investigations conducted in regard to t....
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....ted by DGCEI and details of the credit availed by the appellant. He submitted that the appellant has been implicated in the investigation/proceedings only for the reason that appellant purchased materials from M/s Aerochem Impex and M/s. Aerochem. The proceedings against appellant are on the ground that M/s YM Drugs had not received any material against invoices said to have been issued by M/s Mehta & Company and that therefore M/s YM Drugs had not supplied any material to M/s Aerochem Impex / M/s Aerochem. That M/s YM Drugs issued CE invoices to M/s Aerochem & M/s Aerochem Impex without actually supplying any material and therefore the credit availed on the two invoices dated 24.08.2009 and 06.10.2009 are not eligible. 4. The Ld. Consulta....
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....nt period using the inputs pertaining to the disputed invoice. He submitted that the entire investigation is based on statements. It is brought out in evidence that M/s Aerochem Impex as well as M/s Aerochem were supplying materials along with invoice also, though there has been allegation against them that they issued invoices only without supply of goods. The Ld. Counsel submitted that the department has not conducted any investigation with regard to the transporters to check whether appellant had received the material on the above mentioned invoices. Further there being no discrepancy with regard to the quantity of inputs used and quantity of finished products cleared (input-output ratio), the allegation that the appellant has not receiv....
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....ed only invoices and no material has been supplied against the invoices. He submitted that the confirmation of demand, interest and the equal amount of penalty imposed is legal and proper. 6. I have heard both sides. 7. The foremost fact that is to be stated is that M/s Aerochem Impex/ M/s Aerochem are the major supplier of the appellant. The copy of RG-23 register shows several transactions for supply of material by these two suppliers/dealers to the appellant. Though the department alleges that M/s Y.M. Drugs had issued fake Invoices to M/s Aerochem Impex / M/. Aerochem, and all such invoices are fake, since Mehta & Company is a fictitious firm etc; it is seen that only two invoices No. 312 and 20 dated 24.08.2009 and 06.10.2009 respect....