TMI Blog2019 (1) TMI 1727X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. Since the entire case is a case of availment of Cenvat credit on paper without clearance, movement (transportation) and receipt of inputs; and reversal thereof to inflate business turnover (as fairly submitted by the Ld. Consultant during the hearing), the present case does not appear to be a bona fide case for settlement as envisaged under the law; particularly, Section 32E and case as defined under Section 31(c) of the Central Excise Act, 1944. Without expressing any opinion on the legal validity or otherwise of the duty demanded in the said SCN, the Bench finds that the applicant, by contesting the duty demanded in the SCN in entirety and not accepting any of it, does not meet the eligibility criterion of settlement as set out in Section 32E of the CEA, 1944. What the applicant has been seeking in fact is the validation of their action as it existed prior to issuance of the SCN, which to our mind is legally outside the ambit of settlement as provided in law. On merits, they have been challenging the entire duty demand under the SCN. Even for arguments sake, accepting the plea of the applicant that SCN demanding duty in this case [is] not valid and if we hold so, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils Pvt. Ltd. - a dealer having Central Excise Registration No. AABCJ6867GED002 situated at GIDC, Waghodia (referred to as M/s. Jindal ) without actual receipt of goods namely, AWR of various grades which purported to have been purchased by them. It was also noticed that M/s. Jindal had shown [in] their purchases from M/s. Diamond Projects Ltd., another dealer having Central Excise Registration No. AAACD6470CED003 situated at Vadodara (hereinafter referred to as M/s. DPL ) which appeared to be a group company of M/s. DPIL. 2.3. The officers of DGGSTI extended their enquiry to M/s. DPL. During the scrutiny of the purchase and sales invoices of M/s. DPL, it was noticed that M/s. DPL, had shown purchase of AWR from M/s. DPIL and shown the sale of the said goods AWR to the applicant (M/s. Pet Metal Pvt. Ltd.). It was also noticed that the applicant - a manufacturer has also issued Cenvatable invoices of AWR showing the clearance as such to M/s. DPIL and on the strength of such invoices, M/s. DPIL had availed and utilized CENVAT credit. 2.4 From the investigation, it was revealed that - (i) In the entire transaction of the goods purported to be sold to M/s. DPIL b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d signatory of M/s. DKR in his statements on various dates had accepted and confirmed that they had not provided any vehicle for transportation service of AWR from (i) M/s. DPIL to M/s. DPL and (ii) M/s. DPL to M/s. Pet Metal; that they had neither raised any bill nor received any freight charges/amount from M/s. DPL to M/s. Pet Metal (applicant) for providing of LR for transportation of AWR. 2.5 From the documentary and other evidences, statements of the suppliers and buyers, statement of transporters, vehicle verification reports received from RTOs, it appeared that M/s. DPIL through their group company M/s. DPL had issued fraudulent invoices and fake Lorry Receipts without delivery of the goods and M/s. Pet Metal had availed and utilized wrong CENVAT credit amounting to ₹ 4,03,27,593/- as detailed in Annexure B to the SCN, during the period March, 2013 to August 2014, based on fraudulent invoices of M/s. DPIL and M/s. DPL respectively and based on fake LRs of M/s. DKR. 2.6 Accordingly, the applicant was called upon to show cause to the Pr. Commissioner, CGST C. Excise, Vadodara-I as to why - (i) CENVAT credit amounting to ₹ 4,03,27,593/- including Ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any goods and therefore they were not eligible to take the Cenvat credit at the first instance. (b) In respect of the said Cenvat credit, the applicant claimed that they have reversed the credit on further issuance of the invoice without movement of goods. The fraudulent Cenvat credit taken by them cannot be utilized by them. But again they concealed the fact that this is not a reversal of credit but a case of utilizing fraudulent Cenvat credit, passing on the fraudulent Cenvat credit to M/s. Diamond Power Infrastructure Ltd. and thereby encashing the same. Therefore, their claim of reversal of wrong Cenvat credit can be construed as a deliberate misrepresentation to deceive the Commission and therefore, is a fraud. (c) The SCN is issued to the applicant not only for disallowing fraudulent Cenvat credit taken by them but also for demanding and recovery of such fraudulent credit utilized, passed on and encashed by them. Therefore, the claim of the applicant that there is no duty demand and interest liability is completely false and baseless ignoring the relevant facts. (d) In the light of above factual position, the ground taken by the applicant, before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed or intended to be used in manufacture. Here the case is more of wrongly availed Cenvat Credit reversed immediately without any interest liability. Utilization is only for reversal purpose, so recovery cannot be effected on such an act of the applicant under Rule 14 of Cenvat Credit Rules, 2004. (vi) That there is no prosecution launched till date so the presumption that just because prosecution is being launched in future cannot deny the applicant the opportunity to approach the Hon ble Settlement Commission for waiver of the same. In the instant case the applicant is the main party so the option of settlement is the only relief to buy peace as there is a demand in the SCN which is actually already reversed much before the SCN was issued. 6. Further submissions of the applicant : 6.1 The applicant vide their letter dated 20-6-2018, further submitted that the issue in the instant case is directly covered by Rule 16(1) of Central Excise Rules, 2002, wherein it is stated that where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, reconditioned or for any other reason, the assessee shall stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraudulent documents viz. fraudulent Central Excise invoices purported to show clearances of excisable goods without delivery of any goods, and fake transport documents viz. fake lorry receipts to show purported transport of excisable goods, etc. (iii) The fraudulent nature of documents and non-transportation of goods came to light based on the investigation carried out by the officers of DGGSTI and all such documents were corroborated by evidences during investigation. The non-transportation of goods were also corroborated by evidences of confirmatory statements recorded under Section 14 of the Central Excise Act, 1944 of authorised and responsible person of the applicant company; the owner of transport company; authorized persons of supplier and recipient companies. (iv) The description of goods is shown as Aluminium Wire Rod in the Excise invoices of supplier and the applicant. The applicant has further shown the Aluminium Wire Rod as clearance as such under Cenvat Credit Rules, 2004 after availing Cenvat credit at input stage without receiving any material. It is an admitted fact by the applicant themselves that they do not use any Aluminium Wire Rod in their fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is accepting the fact that applicant has availed fraudulent Cenvat credit so interest would be applicable but in current issue credit is reversed in same month within maximum 3 days. The credit so availed has not been utilized for any payment of duty on any final product. So interest liability is Nil in such case. (vi) The duty demand as being projected by the Revenue s report, if at all, will arise only at the final recipient end of these transactions so it is humbly requested to accept applicant s settlement application in the interest of justice and oblige. 9. Personal hearing : 9.1 Hearing in this case was held on 20-11-2018. The applicant was represented by Consultant Shri Ajay Banerjee. Shri D.K. Bhattacharya, SIO, Shri Amarjit Kumar, IO and Shri Bhavesh Kothyari, IO, DGGSTI, Vadodara, appeared on behalf of Revenue. 9.2 The Ld. Consultant appearing for the applicant reiterated the submission made in their application and stressed that these are only paper transactions to inflate the business turnover. The credit which was taken has been reversed and hence there is no any additional liability. He also pleaded for leniency on penalty as the credit has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification, undervaluation, inapplicability of exemption notification or Cenvat credit or otherwise and any such application shall be disposed of in the manner hereinafter provided : PROVIDED that no such application shall be made unless, - (a) the applicant has filed returns showing production, clearance and Central Excise duty paid in the prescribed manner: (b) a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant : (c) the additional amount of duty accepted by the applicant in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lection of duty as envisaged under the law. Hence, the Bench is of the view that this application also does not qualify to be a case , as defined under Section 31(c) ibid. 10.6 The Bench also finds that the applicant has been taking varying stands at different points during the proceedings. While in their application, they have accepted the duty liability of ₹ 4,03,27,593/- [as at Sl. No. 9(a) of the application], yet in their subsequent submission namely, letter dated 8-6-2018, they have taken different line, stating that the wrong credit was taken and reversed it in the same month and hence there can be no further duty demand. They have also contested the allegations of fake and fraudulent invoices as well as fake transport receipts. According to them, the goods (so called inputs ) were received at factory gate as it was intended to be used but at the last movement, the buyers had cancelled their orders, so they had no option but to avail the credit and immediately reverse it as the goods were diverted from the factory gate itself. According to them, it was not a case of credit not utilized but it is a case of wrong credit reversed . The said contention of the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Union of India as reported in 2015 (39) S.T.R. 711 (Guj.), wherein it was held by the Hon ble High Court that the Settlement Commission is not an alternate to regular and normal adjudication; that the Settlement Commission has no power, authority or jurisdiction to adjudicate disputed questions. (ii) M/s. Indorama Synthetics (India) Ltd. v. Union of India [2013 (290) E.L.T. 208 (Bom.)], wherein it was held that - 7. x x x x. The Settlement Commission has been constituted as an extraordinary measure to enable a defaulting person to make a full and complete disclosure/confession to have the matter settled. It is not a place where one can challenge the show cause notice on merits. In this case the petitioner has made a conscious decision of not going ahead with pending adjudication proceeding but availing the remedy of settlement provided under the Act. Full and complete disclosure is a sine qua non to invoke the jurisdiction of the Settlement Commission. In an application made under Section 32E of the Act, an applicant has to make a full and true disclosure of his duty liability including admission of short-levy on account of misclassification, under valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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