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Jhawar Biotech Pvt Ltd. & Others v/s Commissioner of Central Excise, Mumbai I

    Application No E/S/1569 & 1570/10 in Appeal No. E/1420& 1421/10 & Application Nos. E/S/1571, 1572, 1574 & 1575/10 in Appeal Nos. E/1422, 1423, 1648 & 1649/10 (Arising out of Order-in-Original No.12/M-I/2010 dated 30.03.2010 and Order-in-Original No.13/M-I/2010 dated 30.03.2010 both passed by Commissioner of Central Excise, Mumbai I.)
    Decided On, 03 February 2012
    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
    By, THE HONOURABLE MR. S.S. KANG
    By, VICE PRESIDENT & THE HONOURABLE MR. SAHAB SINGH
    By, MEMBER (TECHNICAL)
    For the Appellants : Mayur Shroff, Advocate and Brijesh Pathak, Advocate, K.K. Singh, Consultant. For the Respondent : Premanand Das, Commissioner (A.R), Navneet, Additional Commissioner (A.R).


Judgment Text
S.S. Kang

1. Heard both sides.

2. The applicant M/s Jhawar Biotech Pvt Ltd filed this application for waiver of pre-deposit of duty of Rs 2,19,97,455/-, interest and penalty. The applicants M/s Vamatex India Ltd filed application for waiver of pre-deposit of total duty of Rs 1,36,80,416/, interest and penalty. The demands were confirmed by disallowing the Cenvat Credit. The demands were also confirmed on the ground that applicants cleared excisable goods without payment of duty. The other applicants filed applications for waiver of pre-deposit of penalties.

3. The contention of the applicants is that a demands were confirmed after denying credit on the ground that the applicants availed credit on the strength of invoices issued by the following non-existent firms:

(i) M/s Dhanlaxmi Textiles

(ii) M/s Cotton Overseas

(iii) Bhavesh Textiles

(iv) M/s Shree Ram Textiles

(v) M/s Radhe SRK

(vi) Ambagi Textiles

(vii) M/s Maruti Mangal Textile

(viii) M/s Balaji Filanonts Ltd

(ix) Chirag Textiles

(x) M/s Depute Fabrics

(xi) M/s Sangeeta Creation

(xii) M/s Vishnu Laxmi Textiles

(xiii) M/s Yurak Fine Fab Ltd

4. The contention of the applicants is that the applicants received duty paid gray fabrics through brokers and paid to the suppliers through banking channels and during investigation it was found that the payments made by the applicants are received in the accounts of the supplier firm. However, the accounts were found to be closed. In these circumstances, it cannot be said the applicants had availed credit on the basis of invoices issued by fake firms. Applicants also availed credit on the strength of invoices issued by M/s Yuvak Fine Fab Ltd and during the investigation, M/s Yuvak Fine Fab Ltd admitted that duty paid gray fabrics were cleared by the applicants and the demands were dropped in this regard. In view of this, it cannot be said that all the above mentioned firms are non-existent as payments were received by the firms through banking channels and the applicants only dealt with the suppliers of gray fabrics through brokers.

5. The applicants are merchant exporter who received duty paid gray fabrics and the credit is availed by the applicants and thereafter gray fabrics sent to job workers for processing. The applicants exported the processed fabrics after receiving it from the job worker or directly from the place of job worker and there is no dispute raised by the Revenue regarding processed fabrics.

6. The applicant filed rebate claims regarding export of processed fabrics which were sanctioned and certain rebate claims were rejected. The contention is that demands were also on account of clearance of printed and embroidered fabrics without payment of duty. The adjudicating authority has not given any finding in this regard and confirmed the demand.

7. The applicant also submitted that the impugned order is passed ex-parte. During the proceedings before the adjudicating authority applicants asked for certain documents which were supplied and date of personal hearing was fixed on 10.1.2010 and the counsel for the applicants vide letter dated 8.1.2010 made a request for adjournment on personal ground. In spite of this, ex-parte order is passed. In view of this, the contention is that the matter be remanded to the adjudicating authority without asking for any pre-deposit for de novo adjudication.

8. The counsel appearing on behalf of M/s M.D. Textiles and Shree M.D. Industries, contended that the applicants were penalized on the ground that the applicants had not paid the duty and issued invoices to M/s Jhawar Biotech Pvt. Ltd on the strength of which credit was availed. The contention of the applicant is that on receipt of notice of personal hearing applicants asked for verification report from the jurisdictional Central Excise authorities which is relied upon by the Revenue in the Show Cause Notice. The adjudicating authority had passed the order without supplying the verification report. Therefore, imposition of penalties on the applicants is not sustainable.

9. The Revenue submitted that applicant M/s Jhawar Biotech Pvt. Ltd and M/s Vamatex India Ltd availed credit on the strength of duty paying documents issued by non-existent firms. As per the verification conducted by the jurisdictional Central Excise authorities, the suppliers of gray fabrics were non-existent firms. The applicants also failed to show the transportation of the goods to their units. Therefore the credit was rightly denied. The Revenue also submitted that there is no acknowledgement by the Revenue on the request for adjournment dated 8.1.2010. Therefore, it cannot be said that the adjournment was asked for. As the applicants, in spite of opportunities granted, not appeared before the adjudicating authority. Therefore, the adjudicating authority decided the issues on merits.

10. We find that the allegation against the applicants is that the applicants availed credit on the strength of invoices issued by fake firms. Show Cause Notices were issued to the applicants giving details of the firms and the Revenue wants to deny the credit on the invoices issued by these firms on the ground that these are non-existent firms. The applicants filed a reply to the Show Cause Notice whereby only stand taken is that the firms are in existence and credit is rightly taken. Applicants also stated in reply to the Notice that the demand is time-barred.

11. We find that neither during investigation, nor in reply to the Show Cause Notice, applicants disclosed the names of brokers through whom the goods were received. Even during the arguments, the counsel for the applicants simply stated that there are number of brokers but unable to give details. The applicants availed credit on the strength of invoices issued by the suppliers of gray fabrics and during investigation it was found that the same were non-existent firms and one supplier M/s Kennington Fabrics Pvt Ltd disclosed during the investigation that eight invoices were issued without supplying any gray fabrics. Similar is the situation in respect of supplier M/s Suvino Exports Pvt Ltd.

12. Further we find that in respect of the demands other than denying the credit, there is no finding in the adjudication order. Therefore, for stay purpose we are taking up the demand of Rs 1,04,22,606/- which is after denying credit of Rs 79,81,867/- in the case of M/s Jhwar Biotech Pvt Ltd and in the case of M/s Vamatex India Ltd we are taking up demand of Rs 66,19,427/-, which is confirmed after denying the credit of Rs 51,14,891/- as the credit has been availed on the strength of invoices issued by non-existent firms and the applicants failed to show the existence of the firms or even the identity of the brokers through whom the gray fabrics was purchased. Applicants also failed to produce evidence regarding transportation of gray fabrics. Hence it is not a fit case for total waiver of duty keeping into facts and circumstances of the case, the applicant M/s Jhawar Biotech Pvt Ltd is directed to deposit an amount of Rupees Twenty lakhs only and M/s Vamatex India Ltd to deposit Rupees Twelve lakhs within eight weeks. On deposit of the above mentioned amount, the pre-deposit of

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remaining amount of duty, interest and penalties are waived. 13. As discussed above, the applicants had not appeared before the adjudicating authority at the time of personal hearing and the order is passed ex-parte and there is no finding in respect of the all the demands which were confirmed in the impugned order i.e., in respect of clearance of processed fabrics without payment of duty and in respect of printed/embroidered processed fabrics. The impugned order is therefore set aside qua the applicants and the matter is remanded to adjudicating authority for de novo adjudication on showing proof of deposit of the above mentioned amounts and thereafter the adjudicating authority will decide afresh after affording opportunity/hearing to appellants. 14. The appeals are disposed of by way of remand.
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