Case Law Details
Atul Madhavji Parekh Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: The case of Atul Madhavji Parekh vs. C.C.E. & S.T. (CESTAT Ahmedabad) revolves around penalties imposed under Rule 26 of Central Excise Rules, 2002. The charges relate to the abetment in the passing of fraudulent Cenvat Credit by M/s Shah Foils Ltd. to M/s Bluplast Industries Ltd. In this article, we delve into the CESTAT Ahmedabad’s decision that set aside the penalties and the grounds on which it was based.
Detailed Analysis: The charges against Atul Madhavji Parekh and Shri Ram Steels involved accusations of facilitating M/s Bluplast Industries Ltd. in obtaining fraudulent Cenvat Credit on invoices issued by M/s Shah Foils Ltd., allegedly without the supply of goods. Notably, a similar show cause notice was issued to M/s Shah Foils Ltd., making the same allegations. However, the case against M/s Shah Foils Ltd. was taken up by the tribunal and even reached the Hon’ble Supreme Court, resulting in a dismissal of the department’s appeal.
In the case of M/s Shah Foils Ltd., the tribunal concluded that the charges of issuing invoices without the actual clearance of goods were not sustainable. The tribunal observed that goods were indeed supplied along with invoices, and the allegations against M/s Shah Foils Ltd. were rejected. Given this precedent, the penalties imposed on Atul Madhavji Parekh and Shri Ram Steels were deemed unsustainable.
Conclusion: The CESTAT Ahmedabad, in its order dated 13.06.2022, has set aside the penalties imposed on Atul Madhavji Parekh and Shri Ram Steels. The decision relied on the precedent established in the case of M/s Shah Foils Ltd., where charges of issuing invoices without the actual clearance of goods were rejected. The tribunal found that the goods were supplied along with invoices, making the charges against the present appellants unsustainable. This case emphasizes the importance of consistent legal interpretation and precedent in determining the liability of individuals or entities in matters of taxation and excise regulations.
The decision by CESTAT Ahmedabad in the Atul Parekh case underscores the significance of legal precedent in taxation matters. The rejection of penalties based on the established precedent in the M/s Shah Foils Ltd. case highlights the importance of thorough examination and consistency in legal proceedings. As the landscape of excise regulations evolves, such cases contribute to shaping the framework for fair and just outcomes in similar situations.
Issue- In this case Learned Commissioner (Appeals) upheld the penalty imposed by the Adjudicating Authority under Rule 26 of Central Excise Rules, 2002 for the charge of Abetment in passing of fraudulent Cenvat Credit without supply of goods by M/s Shah Foils Ltd., to M/s Bluplast Industries Ltd.
Held by CESTAT
In both these cases the charge was made of abatement in passing on fraudulent Cenvat Credit to M/s Bluplast Industries Ltd. on the invoices issued by M/s Shah Foils Ltd. without supply of the goods. I find that on the same investigation and on the same facts a show cause notice was also issued to M/s Shah Foils Ltd. making the same allegation that the M/s Shah Foils Ltd. passed on the fraudulent credit by issuing invoices without supply of the goods. The said charge was set aside by this tribunal and the same was upheld upto the Hon’ble Supreme Court.
Tribunal in the case of M/s. Shah Foils Ltd. held that the contention of the revenue is not sustainable regarding charge of issuance of invoices without actual clearance of goods. On this basis only present appellant were imposed penalty under Rule 26. Since, the tribunal in the above decision clearly held that the goods have been supplied along with invoices. The charges against the present appellants are not sustainable.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These appeals are directed against Order In Appeal No. CCESA-SRT (APPEALS)/PS-475/2018-19 dated 25.10.2018 in case of Shri Atul Madhavji Parekh and OIA No.CCESA-SRT(APPEALS)/PS-474/2018-19 dated 25.10.2018 in case of Shri Ram Steels. By the above orders the Learned Commissioner (Appeals) upheld the penalty imposed by the Adjudicating Authority under Rule 26 of Central Excise Rules, 2002 for the charge of Abetment in passing of fraudulent Cenvat Credit without supply of goods by M/s Shah Foils Ltd., to M/s Bluplast Industries Ltd.
2. Shri Shailesh Sheth, Learned Counsel appearing on behalf of the appellant submits that these cases were made out under a common investigation carried out against the main case of M/s. Shah Foils Ltd. The charges against both the appellants are that they have facilitated Bluplast Industries Ltd. for taking fraudulent Cenvat Credit on the invoices issued by M/s Shah Foils Ltd. without supply of the goods. He submits that the M/s. Shri Ram Steels has carried out the job work on the good supplied by M/s Shah Foils Ltd on behalf of M/s Bluplast Industries Ltd., entire transaction have been done following the procedure under Rule 4(5) (a) and under cover of challans. Therefore, there cannot be any charge of abetment on M/s Shri Ram Steels for any alleged fraudulent availment of credit by the M/s Bluplast Industries Ltd. Therefore, as regard Shri Atul Madhavji Parekh, he submits that this appellant has acted as broker for supply of goods by M/s Shah Foils Ltd. to M/s Bluplast Industries Ltd. He further submits that the present cases are directly connected to the case of M/s.Shah Foils Ltd. upon which there was an allegation that M/s. Shah Foils Ltd. has issued invoices without supply of goods to M/s Bluplast Industries Ltd and others. A show Cause Notice was issued to M/s Shah Foils Ltd. also making the same allegation. The case of the M/s Shah Foils Ltd the tribunal has dropped the proceedings rejecting the evidences relied upon by the department. The allegation of issuance of invoices without supply of goods is also derived from the evidences relied upon in the case of M/s Shah Foils Ltd. The case of M/s Shah Foils Ltd. subsequently taken by the department to the Hon’ble Gujarat High Court. The Ho’ble Gujarat High Court has upheld the order of the tribunal. Thereafter, department had filed appeal before the Supreme Court under special leave petition No. 13826 – 13828/2020. The Hon’ble Supreme Court also dismissed the department’s appeal. As per this status of the Shah Foils case the present proceedings also deserves to be set aside.
3. Shri Vinod Lukose, Learned superintendent (Authorized Representative) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. I have carefully considered the submissions made by both the sides and perused the records. I find that in both these cases the charge was made of abatement in passing on fraudulent Cenvat Credit to M/s Bluplast Industries Ltd. on the invoices issued by M/s Shah Foils Ltd. without supply of the goods. I find that on the same investigation and on the same facts a show cause notice was also issued to M/s Shah Foils Ltd. making the same allegation that the M/s Shah Foils Ltd. passed on the fraudulent credit by issuing invoices without supply of the goods. The said charge was set aside by this tribunal and the same was upheld upto the Hon’ble Supreme Court. On this particular issue in this tribunal in the case of M/s Shah Foils Ltd. 2019 (1) TMI 1162-CESTAT AHMEDABAD given the following observation:
“23. The demand has also been made against Appellant on the ground that they issued invoices without delivery of goods, the statement of Shri Pravin Vasant Mehta of M/s Jigar Plast was recorded on 13.12.2013 wherein he has stated that sale invoices of the Appellant without delivery of goods has been reversed. However we find that Shri Pravin Mehta has nowhere stated that they have purchased goods from M/s SFL. He has stated that all the goods were procured by M/s Jigar Plast through broker Shri Atul Parekh. Shri Pravin Mehta also stated that Shri Atul Parekh has received goods and invoices from the SFL in the name of varios parties including M/s Jigar Plast and whenever they received intimation from Shri Atul Parekh regarding receipt of goods from Appellant, M/s Jigar Plast prepared job work challan in the name of their job worker M/s Shree Ram Steels where the goods were unloaded directly. It is also appearing from the statement of brokers viz. Shri Chhail Singh Deora dt. 26.11.2013 that for purchase of goods they had to take invoice in name of any party. Same statement has been given by Shri Narendra Bhai, broker in his statement dt.21.11.2013. It is therefore clear that whenever the invoice was issued by the Appellant, the goods were also cleared against such invoice. In such case the Appellant cannot be found faulted with. Even it is clear that Shri Kartik Shah in his statement dt. 28.01.2014 when questioned in respect of “Sankalp Vat Collection” has stated that the Appellants have always cleared goods on payment of duty. The adjudicating authority has held that Shri Kartik Shah with reference to “Sankalp Vat Collection” has stated that the conclusion by the officer that only invoice has been issued is correct. We find that first of all the legitimacy of data found in pendrive is not free from doubt. Further in view of above finding it is clear that the Appellant has consigned the goods to their buyers through M/s SFPL. The goods were handed over to the parties/ brokers from Vasai godown by M/s SFPL and the Appellants had no role to play in such delivery of good. There is no evidence at the Appellant’s end that they issued any invoice without delivery of goods. We therefore found that the contention of the revenue that the Appellant issued invoice without actual clearance of goods is not sustainable.”
From the above observation of this tribunal in the case of M/s. Shah Foils Ltd. it was held that the contention of the revenue is not sustainable regarding charge of issuance of invoices without actual clearance of goods. On this basis only present appellant were imposed penalty under Rule 26. Since, the tribunal in the above decision clearly held that the goods have been supplied along with invoices. The charges against the present appellants are not sustainable.
5. Considering the above facts and observation, I am of the view that the appellants are not liable for penalty under Rule 26. Accordingly, the penalties are set aside. Appeals are allowed.
(Pronounced in the open Court on 13.06.2022)
