DGCEI Claims Rs. 100 crs Fraud Cenvat Credit Detection in Ship Scrap Cases

Dealer-Re-rolling Mill-Furnace Unit Nexus Alleged

Directorate General of Central Excise Intelligence (DGCEI) Hqrs., New Delhi, detected a major case of central excise duty evasion and booked a case of misuse of Cenvat credit by the dealers viz. M/s. Sai Steel Traders and M/s. Sai Multimetals, Mandi Gobindgarh for issuing cenvatable invoices fraudulently to furnace units of Mandi Gobindgarh etc. without actually supplying the goods.

The search operation resulted in recovery of large number of incriminating documents. Preliminary scrutiny of seized documents indicated that these cenvatable invoices have been generated against the goods and duty paid invoices of old and used plates received from the ship breakers of Bhavnagar, Gujarat. Even though the goods were actually supplied to re-rolling mills of Mandi Gobindgarh / Khanna on cash basis without bills, the invoices were supplied to the furnace units of Mandi Gobindgarh etc. on cheque basis. The cash received from the re-rolling mills was paid to the furnace units. Vital evidences gathered indicate that the dealer-manufacturer nexus was in play which goods were sent to Rolling Mills and invoices were issued to the furnace units. In this manner, a huge amount of inadmissible CENVAT Credit was passed fraudulently to these furnace units without supplying the goods.

The search operation conducted by the DGCEI (Hqrs.) indicates massive and rampant misuse of cenvatable invoices. The fraudulent availment of Cenvat credit and consequent loss of revenue is estimated to be in the range of Rs.100 crore.

The above case booked by DGCEI (Hqrs.), New Delhi is another case of evasion of Central Excise duty by way of mere paper transactions without actual supply of goods thereby causing a huge loss to the country’s revenue.

[Source: PIB (MoF) Press Release dated 8^th April 2013]