The Hindu Business Line : DGCEI says Cenvat credit frauds result in huge revenue loss

The charge
Investigations so far reveal that the Ind-Swift group of companies has taken credit worth crores of rupees on the basis of invoices of fictitious/non-existent or non-registered manufacturers and dealers.
The company's MD said Ind-Swift has purchased some items from companies in Delhi and Ghaziabad for its expansion.
These companies had charged Ind-Swift Cenvat, but had not deposited it with the Revenue Department.

New Delhi , March 15

The Directorate General of Central Excise Intelligence (DGCEI) has said that several dealers and manufactures have fraudulently availed themselves of Cenvat credit leading to a loss of several hundred crores to the Government.

According to an official statement, "... a large number of dealers and manufacturers are involved in Cenvat misuse fraud in several parts of the country. Faridabad, Naraina (Delhi), Mandi Govindgarh, Vashi (New Mumbai), Hyderabad and Ahmedabad are suspected to be major centres for these unscrupulous dealers.

"Further investigations are expected to unearth fraudulently availed Cenvat running into several hundred crores of rupees."

Recently, the DGCEI raided the office and premises of Chandigarh-based pharmaceutical company Ind-Swift Ltd and a large number of manufacturers and dealers in Ghaziabad and Noida.

Investigations so far reveal that the Ind-Swift group of companies has taken credit worth crores of rupees on the basis of invoices of fictitious/non-existent or non-registered manufacturers and dealers.

The company has already deposited Rs 5 crore voluntarily, said the release.

According to Mr V.K. Mehta, Joint Managing Director, Ind-Swift said, "The company has been undertaking an expansion of Rs 100 crore and we had purchased some items from companies in Delhi and Ghaziabad.

"These companies had charged us Cenvat, but had not deposited it with the Revenue Department.

"This is under investigation and we are cooperating with the Government."

Under the Central Excise Act and the Cenvat rules, manufacturers of excisable goods are entitled to take credit of the central excise duty paid on inputs, while paying excise duty on finished products.

Over the years, the Government has liberalised the administration of tax laws. Dealers trading in excisable goods are permitted to issue invoices showing duty payment in respect of goods traded by them and actual manufacturers are entitled to use these invoices to take credit on the duty paid on inputs purchased from traders.

"Investigating agencies suspect large-scale issue of fake invoices by these traders to unscrupulous manufacturers resulting in huge loss to Government revenue.

"With the lid blown off the scam by the DGCEI, the apex investigating agency, is expected to come down heavily on the fraudsters if the recent arrests over the past two months are any indication," the statement said.

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