Two metal dealers in Mandi Gobindgarh are charged with evading central excise duty worth Rs. 100 crore.
The revenue department detected the evasion on Monday and the directorate general of central excise intelligence (DGCEI) lodged a case against Sai Steel Traders and Sai Multimetals about the misuse of CENVAT credit, the central board of excise and customs (CBEC) has claimed in a statement.
"The DGCEI's search operation unraveled massive and rampant misuse of CENVAT-able invoices. The fraudulent availing of CENVAT credit and the consequent loss of revenue is in the range of Rs. 100 crore," the CBEC added.
The DGCEI (headquarters) charged the dealers with issuing Cenvat-able invoices fraudulently to the furnace units of Mandi Gobindgarh without actually supplying the goods. The preliminary scrutiny of documents seized suggest that the invoices were generated against the goods- and duty-paid invoices of old and used plates received from the ship breakers of Bhavnagar, Gujarat.
"Evidence indicates that in the dealer-manufacturer nexus at play, goods were sent to rolling mills and invoices issued to the furnace units. In this manner, a huge amount of inadmissible CENVAT credit was passed fraudulently to the furnace units without supplying the goods," the board of excise and customs stated.
The case, said the CBEC, was another in the evasion of central excise duty by way of mere paper transactions without actual supply of goods.
What is CENVAT
* In India, an excise tax is levied on the manufacturer of goods when those goods leave the place of manufacture. Formerly called the central excise duty, this tax now is known as the central value-added tax (CENVAT).
* Manufacturers may offset duty paid on materials used in the making process by using that duty as a credit against excise tax through a process known as CENVAT credit. The offsetting process was formerly known as modified value-added tax (MODVAT).