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M/s Subodh Steels Versus C.C.E. & ST Chandigarh

Clandestine removal - issuance of invoices only - Held that: - I find that the Department has adduced sufficient evidence that the first stage dealer M/s Rohit Ispat had no godown, that he had taken the registration on the basis of bogus rent deed and on the trading of pig iron shown as admitted by the proprietor of the M/s Rohit Ispat were only paper transactions without any accompanying goods - Evidently, there was fraud committed right from the day the dealer M/s Rohit Ispat applied for his r .....

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under Rule 26(2) of Central Excise Rules, penalty is imposable on any person who meets the requirement of that Section, which the appellant meet as they issued invoices without delivery of goods. - Request for cross-examination denied - Held that: - I find that when the appellant failed to participate in the original proceedings, despite several opportunities were granted to them, it reflects that the appellant are following dilatory tactics to deprive the Revenue from recovery of its legit .....

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nd record and submission made in the appeal memo and stated that no personal hearing is required in this case. I also find that there has been no appearance on behalf of appellant on dates of previous hearing on 09.03.2017, 30.3.2017 and 09.05.2017. 2. In view of the express request by the Ld. advocate, the matter is taken up for final decision with the help of Ld. AR. 3. The brief facts of the case are that the appellants M/s Subodh Steels was registered as a second stage dealer. During the per .....

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forging the signature of the landlord of the premises and issued Cenvatable invoices without having any office or godown to store the excisable goods and also did not maintain/produce the record before the investigation officers. The investigation also revealed that goods cleared by them to Noticee (M/s Rohit Ispat) were foundry grade II low manganese Pig Iron and that the end use of this type of pig iron was for the production of different types of casting articles in foundaries whereas Noticee .....

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ry statement dated 3.2.2008 of Sh. Suresh Yadav, Prop., of Rohit Ispat admitting the facts was recorded by the officers under Section 14 of the Act. Sh. Suresh Yadav had confessed that he was not actual trader but indulged in issuance of invoices only and that trading of pig iron shown by him were only paper transactions. The statement dt.03.02.2008 of Sh. Suresh Yadav was never retracted. As for the main case pertaining to M/s Rohit Ispat, the Ld. Commissioner in the same Order-in-Original gave .....

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pect of the said premises to show the possession of the same. Had the Noticee actually existed there, its records/ computer and the stock of goods, Pig Iron etc. should have been found there during verification by the local Preventive staff but during their visit nothing of this kind was found existing there. Further, their arrest by the Police on the basis of FIR No. 260 dt. 10.10.2007 under Section 465, 467 & 469 of the IPC and Sections 65, 66 & 70 of the information & Technology A .....

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Commissioner of Central Excise to revoke/suspend a registration granted, if the holder of such certificate or any person in his employment, is found to have committed breach of any of the provisions of the Act or the Rules made there under. The condition No. (i), of the Registration Certificate granted to the Dealer clearly mentions that the registration certificate is valid only for the premises and purposes specified in the application. Further, instruction (1) of the Form A-1 Registration App .....

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mation already submitted by them at the time of obtaining the registration. Since the Dealer did not exist at premises for which it had obtained the registration by fraud by submitting fake and bogus Rent Deed by forging the signatures of the Landlord Sh. Rajinder Parshad and it had not filed any amendment application regarding changes in the information already furnished by them, the Registration held by the Dealer have become null and void and as such the Cenvatable invoices issued by the Deal .....

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eipt / storage / dispatch of Pig Iron. Some of the buyers had voluntarily debited the Cenvat Credit wrongly availed by them. This is however, only one part of the story. Second and most important part is that the notice had issued invoices without dispatching any goods, on the strength of which the buyers had availed credit wrongly. 5. After the investigation, the registration of M/s Rohit Ispat was cancelled retrospectively w.e.f. 20.12.2006 as he had produced fake and forged rent deed of the p .....

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and further sold to the manufacturing units. I find that the Department has adduced sufficient evidence that the first stage dealer M/s Rohit Ispat had no godown, that he had taken the registration on the basis of bogus rent deed and on the trading of pig iron shown as admitted by the proprietor of the M/s Rohit Ispat were only paper transactions without any accompanying goods. 7. Evidently, there was fraud committed right from the day the dealer M/s Rohit Ispat applied for his registration and .....

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ase (AIR 1994 S.C. 853)]. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity. When fraud is established that unravels all. [Ref : UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.) and in Delhi Development Authority v. Skipper Construction Company (P) Ltd. - AIR 1996 SC 2005]. Any undue gain made at the cost of Revenue is to be restored ba .....

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o not dwell together for which penal provisions are enacted to eradicate evils of defrauding Revenue which is anti-social activity adversely affecting public revenue. Such provisions are construed in the manner which curbs the mischief, promote their object, prevent their subtle evasion and foil their artful circumvention. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take in its fold any one or series of unlawful acts committed or omissions made. .....

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that fake documents is ab intio unlawful and void and action on such document cannot sanctify it or make it lawful. Such document cannot give rise to any right or benefit in law. Following the above ruling, the fake invoices issued by M/s.Rohit Ispat are inherent nullity and no credit of duty could be taken on such fake invoices. 10. The second plea of the appellant is that as duty payment on the goods was not disputed, no doubt could be raised on the ground that the invoices were raised by the .....

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ration was taken on the basis of forged and bogus rent deed. Further in the above cited case, the assessee had produced the certificate from the manufacture showing payment of duty invoice wise and in those circumstances, Hon ble High Court held that the Modvat could not be denied. No such invoices are on record in this case. The appellants have further contended that the registration to a dealer was granted after physical verification and the dealer was regularly filing the return showing purch .....

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to be non-existent on the basis of bogus or fake rent deed, in such a situation, the appellant s claim of actual receipt/storage/dispatch of pig iron is an impossibility and therefore fraudulent and hence liable to be penalized. The appellants have further argued that invocation of Rule 9(3) is contradictory to the offence being alleged on the part of the appellant, I find that the penalty has been proposed against the appellant under Rule 26(2) of the Central Excise Rules for issuing 5 Cenvat C .....

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