Rejection of SVLDR Scheme because of unreasonable errors is not valid: CESTAT [Read Order]

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that rejection of  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR) scheme because of unreasonable errors is not valid.

Shri V.K. Aggarwal and Shri J.K. Aggarwal, the appellants challenged the Order-in-Appeal, whereby the appeals were dismissed. Both the appellants are Directors of the Company, M/s. Indian Concast Pvt. Ltd., which is engaged in the manufacture of copper wire rods.

On the basis of an information received from Directorate General of Central Excise Intelligence (DGCEI) that Shri Amit Gupta, Director of M/s. Progressive Alloys India Pvt. Ltd. along with associated registered dealer units viz. M/s. Forward Minerals, M/s. Unnati Alloys Pvt. Ltd., M/s. Metal Alloys Pvt. Ltd. and M/s. Brilliant Metals Pvt. Ltd. was passing in- admissible cenvat credit to various manufacturers of excisable goods without physical delivery of the goods.

An investigation was carried out and it was observed that M/s. Moral Alloys had issued bogus invoices to the company without actual supply of the goods and on the basis of the fake invoices, the company availed the cenvat credit amounting to Rs.5,93,906/-. Show cause notice dated 31.03.2017 proposing reversal of credit along with interest and penalty under the provisions of Cenvat Credit Rules (CCR) ,2004 was issued. A penalty under Rule 15 (2) of CCR, 2004 read with Rule 26 of Cenvat Credit Rules, 2002 was proposed on all the Directors of the company.

The Company filed an application vide Form – SVLDRS-I, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on 31.12.0219. The said application was accepted and a discharge certificate was issued on 8.7.2020 showing complete and final discharge of the duty liability. Consequently, the company was exonerated from all the charges leveled in the show cause notice.

The Adjudicating Authority vide Order dated 30.03.2022 noted the fact of issuance of discharge certificate under the SVLDR Scheme in favour of the company and observed that the matter cannot be adjudicated any further against the company, however, he proceeded to consider the show cause notice against the co-noticees and decided the issue against them imposing penalty.

The appellants challenged the order of the Adjudicating Authority in appeal and the Commissioner (Appeals) upheld the order-in- original by the impugned order. Hence, the present appeals are filed by the above two appellants before this Tribunal.

A Single member bench comprising Ms. Binu Tamta, Member (Judicial) viewed that the object with which the scheme has been introduced and the intention of the Government to make it a grand success, it is necessary that the relief sought by the appellant deserves to be allowed and penalty imposed on them needs to be set aside. The Circular issued by the department is binding on them.

On introduction of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, the main noticee, M/s. Bhikusa Papers Pvt. Ltd and other co-noticees settled the dispute under SVLDRS, but the present appellant, who is a director of the main noticee failed to opt under the Scheme. However, without considering the directions given in the remand order and allowing cross examination, Commissioner has imposed penalties on the appellant, just for reason that the appellant did not settle the issue along with others under  SVLDRS. 

Such approach of Commissioner cannot be justified. Even if the appellant has not approached under SVLDRS, Commissioner should have adjudicated as directed by Tribunal.

While allowing appeal, the CESTAT set aside the impugned order and the penalty imposed on the appellants.

To Read the full text of the Order CLICK HERE

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