By TIOL News Service

NEW DELHI, FEB 03, 2013: THE applicants are manufacturers of copper wire chargeable to Central Excise duty. They were availing CENVAT credit of Central Excise duty paid on inputs used in or in relation to manufacture of their final product, as per the CENVAT Credit Rules, 2004. According to the applicants, they took credit on Copper Ingots supplied from a unit in J&K and delivered to the job workers of the applicants.

On investigation by the officers of DGCEI, it was found that the unit in J&K had not manufactured the impugned goods and issued bogus invoices without supply of the goods. On the basis on investigations, the department issued Show Cause Notice alleging that the applicant had availed the CENVAT credit of Rs.90,63,072/- in a fraudulent manner on the basis of bogus invoices issued.

The applicants pleaded that in view of the action already initiated against the supplier of goods by issuing notice for imposing equal penalty of Rs 90,63,072/-, no penalty can be imposed on the applicants for the same offence and prayed for waiver of pre-deposit.

After hearing both sides, the CESTAT held:

Though the show cause notice issued to the manufacturer of copper ingots is still pending adjudication, probability is more that the allegation against them for of issuing bogus invoices is correct. Prima facie, for deciding the question of dispensation from the requirement of pre-deposit under Section 35F, the question which has to be decided is as to whether the evidence on record indicates the likelihood of the allegations of the duty evasion being upheld and if there is slightest risk to the Revenue, the dispensation from the provisions of Section 35F should not be given and if it has to be given the stiff conditions have to be imposed to safeguard the interests of the Revenue. If the allegation against the manufacturer of copper ingots of having issued bogus invoices are proved, the allegations against receiver of the bogus invoices of having availed Cenvat credit in a fraudulent manner and against other appellants of having abetted this offence would also stand proved. In view of these circumstances, this is not the case for total waiver. A person who is, prima facie, found to have evaded taxes by resorting to fraud, wilful misstatement, suppression or contravention of the law with intent to evade the tax would not deserve the dispensation from the compliance with the provisions of Section 129E of Customs Act, 1962 or Section 35F of the Central Excise Act, 1944.

Accordingly, the Tribunal ordered pre-deposit of Rs 75,00,000/- in respect of main applicant and also ordered pre-deposit in respect of other applicants also.

(See 2013-TIOL-206-CESTAT-DEL)