2018 (7) TMI 321 – CESTAT KOLKATA – TMI – Penalty u/s 11AC – fraudulent availment of CENVAT credit – fake invoices without actual receipt of goods – paper transactions – Held that:- It is evident from the record that the Assessee reversed the credit availed on the basis of the invoices issued by the two supplier companies. It was found that the credit was availed on the basis of the invoices without actual receipt of the goods. Apparently, fact of reversal of credit is linked with non-receipt of the inputs and no other conclusion can be drawn – the Order of the Commissioner (Appeals) regarding the setting aside of the penalties cannot be sustained.
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The Tribunal in the identical situation in the case of M/s. Steel Centre [2017 (9) TMI 1251 – CESTAT KOLKATA] upheld the demand of CENVAT Credit along with interest and imposition of penalty on the assessee and reduced the penalties on the co-noticees.
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Penalty imposed on M/s. Bindawala Cables & Conductors Limited is upheld subje
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that the assessee had availed CENVAT Credit wrongly on M.S. Wire/ Wire Rod showing the purchase of the said goods under the invoices issued by M/s. Kritika Wires Private Limited, M/s. Shivam India Limited without receiving the inputs in their factory. After thorough investigation, a Show Cause Notice dated 16.09.2015 was issued proposing denial of CENVAT Credit along with interest and to impose penalty on the assessee and other persons. The Adjudicating authority disallowed the CENVAT Credit of ₹ 20,18,930/- alongwith interest against the assessee and also imposed penalty of equal amount of CENVAT Credit on the assessee, Respondent No. 1 herein. It has also imposed penalty of equal amount of CENVAT Credit on M/s. Bindawala Electricals Industries Limited and penalty of ₹ 20,18,930/- on Shri Bhagwan Das Bindawala, Director of the Assessee Company, penalty of ₹ 18,12,724/- on M/s. Kritika Wires Private Limited and penalty of ₹ 2,06,206/- on M/s. Shivam India Limite
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tral Excise, Patna vide Order No. FO/77411- 77415/2017 dated 21.09.17 upheld the penalty on the assessee and also reduced the amount of penalty on the co-appellants. 3. The Learned Counsel for the Respondents submitted that the assessee placed Orders for M.S. Wire Rods to various Manufacturers/Sellers, M/s. Kritika Wires Private Limited and Shivam India Limited and the payments were made. The goods were received between September 2010 to March 2011 in a routine manner and the goods were received in their factory and utilized in the manufacture of final products. It is submitted that the assessee found M.S. Wire Rods unviable for M.S. Wire production and the credit taken on the goods before utilization was reversed by them on 31.03.2011. Thereafter, the Central Excise Audit party on or around 17.04.2013 raised the dispute of wrongful availment of credit. It is submitted that the Commissioner (Appeals) rightly set aside the penalties as the Revenue failed to produce any evidence of non r
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n my considered view, it is not necessary to go on this issue as the Noticee had already reversed the credit. The case of the Revenue is that the assessee availed the credit in a fraudulent manner and therefore imposition of penalty is warranted under the provisions of Section 11AC of the Central Excise Act. 7. I find that the Commissioner (Appeals) set aside the penalty that there is no evidence produced by the Revenue to substantiate the fact that the assessee has procured the inputs from elsewhere. It is observed that the allegation of the Revenue, that the assessee was not entitled to avail the CENVAT Credit, since they have only resorted to paper transaction without actual receipt of the impugned goods, to be devoid of merit. The Commissioner (Appeals) proceeded on the basis that the assessee reversed the credit before the issuance of the Show Cause Notice and therefore there was no mala fide intent on the part of the assessee. I am unable to accept such findings of the Commission
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received by MCU. Further, the payments for the same had been made by MCU by Account Payee Cheque or through RTGS. It has also been argued that some of the registration numbers of the vehicles indicated in the consignment notes might have been recorded by mistake. 5) It has been argued on behalf of the BSC that penalties may not be imposed on BSC as well as on the partner Shri Bimal Kr. Kheria. 6) The CENVAT Credit availed by MCU on the basis of invoices issued by BSC as well as M/s. Steel Centre. The goods from BSC as well as Steel Centre have been claimed to be transported by UFC and have been accompanied by their consignment notes but the investigation undertaken at the end of UFC has established, through the statement of Shri Bithal Agarwal, that UFC has never undertaken transportation of goods covered by the invoices, issued by the two suppliers. It has been admitted that the consignment notes have been issued only in return of 2% commission. Further, the Department undertook verif
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o be disallowed. 9) We find that a similar issue of fraudulent CENVAT Credit availment on the invoices issued by first stage dealers came up before the Mumbai Bench of the Tribunal in the case of Bhagwati Steel Casts Ltd. Vs. CCE, Nasik [2013 (293) ELT 417 (Tri-Mumbai) in which Tribunal, vide three Member Bench decision, upheld the order and disallowed the CENVAT Credit on the basis of dealer s invoices which were accompanied by consignment notes in which vehicle numbers were found to be incapable of transporting goods. The above decision is also followed by the Tribunal in the final order No. of Ankit Exim Pvt. Ltd. & others Vs. CCE, New Delhi in final order No. 53839- 53841/2017-Ex [DB] dated 09.06.2017. 10) In view of the above discussions, recovery of CENVAT Credit alongwith interest as well as penalty of ₹ 1,16,03,673/- imposed against MCU, are upheld. 11) We conclude that the CENVAT Credit availed by MCU on the basis of such fraudulent invoices issued by the two dealers
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s of the case and the ratio of the case laws, the imposition of penalty on Shri Bhagwan Das Bindawala, Director of the Assessee is required to be set aside. However, the Respondents namely M/s. Bindawala Electricals Industries Ltd and M/s Kritika Wires Pvt. Ltd. were involved in the offence and facilitated the assessee to avail the irregular Cenvat Credit in a fraudulent manner and therefore the imposition of penalty is justified. In view of the above discussion, the impugned Order passed by the Commissioner (Appeals) is modified as under:- i) Penalty imposed on M/s. Bindawala Cables & Conductors Limited is upheld subject to the option of payment of 25% of duty within 30 days under Section 11AC would be allowed. ii) Penalty imposed on Shri Bhagwandas Bindawala is set aside. iii) Penalties imposed on M/s. Bindawala Electricals Industries Ltd. and M/s. Kritika Wires Pvt. Ltd. are reduced to ₹ 2 Lakhs each. 8. All the appeals as filed by the Revenue are disposed off in the above
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