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TMI Blog2008 (7) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable for amount of duty in a case where goods were purchased by the principle Supplier and not by the Appellants? 2. The facts in brief are that the appellant-assessee, at the relevant time, was engaged in manufacturing processed fabrics on job-work basis. During the course of its business, in June 2003, the appellant had undertaken job work from one M/s. Jhanwar International (the principal manufacturer) for processing fabrics. The appellant received grey fabrics for processing, under challans issued by the principal manufacturer and invoices issued by M/s. Muskan Prints who had sold the grey fabrics to the principal manufacturer and consigned the goods to the appellant. The appellant availed credit on duty paid inputs used for the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order dated 08.11.2006 confirmed the amount of duty and set aside the penalty. The appellant thereafter moved an application for rectifying the aforesaid order passed by the Tribunal, which came to be rejected by the impugned order dated 25.05.2007. 5. Mr. Hardik Modh, learned Counsel for the appellant has drawn the attention of the Court to the provisions of sub-rule (2) of Rule 7 of the Rules to submit that under the said Rule the manufacturer or producer taking CENVAT credit on inputs or capital goods is required to take all reasonable steps to ensure that the inputs or the capital goods in respect of which he has taken the CENVAT credit are goods on which the appropriate duty of excise as indicated in the documents accompanyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Muskan Prints of Surat. M/s. Muskan Prints did not exist in the address given by them. There is a clear evidence of fraud on the part of M/s. Muskan Prints. Any fraud vitiates the transaction. The document cannot be held to be valid for the purpose of taking credit. The appellant is the manufacturer; the duty liability and obligation to follow the Central Excise law and procedure is on them. They are the party who has taken the credit. It is seen that there is a clear understanding between the appellant as a manufacturer and M/s. Jhanwar International, the merchant manufacturer as to who shall bear the burden in case the credit became ineligible. Did the appellant and the merchant manufacturer had premonition or knowledge about the non-exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that the credit was not available. As regards the second issue, though the conduct of the appellant manufacturer was found to be suspicious but still the benefit of doubt was given holding that the appellant did not have knowledge or intention in wrongly availing the Cenvat credit. In the light of the overall evidence and taking the entire facts and circumstances of the case, it has been categorically held that the invoices raised by M/s Muskan Prints based on which the appellant manufacturer had taken credit is not valid for the purpose of taking credit by the appellant. It was also directed that the appellant was required to pay duty and interest as demanded by the original authority and confirmed by the appellate authority. Grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supplier, as the case may be, by the Superintendent of Central Excise within whose jurisdiction such manufacturer has his factory or the supplier has his place of business, and where the identity and address of the manufacturer or the supplier is satisfied on the strength of a certificate, the manufacturer or producer taking CENVAT credit shall retain such certificate for production before the Central Excise Officer on demand." 11. Thus, "reasonable steps" as envisaged under the aforesaid provision are that the manufacturer or producer taking CENVAT credit on the inputs or capital goods received by him should satisfy himself about the identity and address of the manufacturer or supplier, as the case may be, who has issued the document ..... X X X X Extracts X X X X X X X X Extracts X X X X
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