Goods Transportation Documents would not absolve Liability that Inputs against which Credits availed were not Valid: CESTAT [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods transportation documents would not absolve liability that inputs against which credits availed were not valid.

M/s Aditi International proprietorship firm of Mr. Bharat Shetty is one of such buyers of such sandalwood oil and it had been availing CENVAT Credit against invoices issued by M/s J.G. Spices Ltd. Further, investigation by DGCEI also revealed that Mr. Bharat Shetty was not only the buyer of M/s J.G. Spices Ltd. but also its financer and it was aiding and abating the illegal operation of M/s. J.G. Spices Ltd. with profit sharing basis.

On the basis of investigation reports, 16 units including M/s J.G. Spices Ltd. and M/s. Aditi International were noticed on 25.04.2012 with demands raised for the past five years, matter was adjudicated by the Commissioner, Shillong as common adjudicator being specially appointed by CBEC vide its Order No. 8/2012-C and the above noted duty, penalty and interest were confirmed against the present Appellant Mr. Bharat Shetty as proprietor of M/s. Aditi International.

The Counsel for the Appellant submitted that it had produced every detail of its transaction with M/s J.G. Spices Ltd. to the adjudicating authority including copies of transit pass issued by Forest Department Shillong, Railway, Transit receipt etc. but without giving due consideration to those documents evidencing transportation of goods from M/s J.G. Spices Ltd., Meghalaya to Navi Mumbai, such a demand was confirmed by the adjudicating authority on the sole ground that M/s J.G. Spices Ltd. had no capacity to manufacture such huge quantity of product in its existing machinery.

The AR for the Respondent-Department submitted that taking advantage of the beneficial notification meant for the North Eastern region, the goods were technically imported/taken to Meghalaya to M/s J.G. Spices Ltd. firm whereby additional duty of Excise was returned back to M/s J.G. Spices Ltd. and after those were being shown as sold through issue of invoices, the purchasers were being taking the CENVAT Credits of the duty paid through those invoices but it was an organized crime done by group of people in a planned manner to syphon public money into their account and such evil design must have to be strongly dealt with.

A Two-Member Bench comprising Dr. Suvendu Kumar Pati, Member (Judicial) and Anil G. Shakkarwar, Member (Technical) observed that “This being so, we have got no hesitation to come to the conclusion that goods were imported in sealed condition, taken to M/s. J.G. Spices Ltd., Meghalaya and kept therein also in sealed conditions and again returned back to different traders including the Appellant in sealed conditions affixing transit permit, railway freight invoices and in the process additional Excise Duty which was VAT component of State’s tax collected by Union and Central Excise duty both were realized at both the points by the supplier and purchasers respectively causing loss to the State exchequer.”

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