2009 (4) TMI 558 - AT - Central Excise

Summary

Issues involved: Denial of Cenvat credit to appellants for procuring inputs from registered dealers based on alleged fictitious addresses leading to disallowance of credit, demand confirmation, interest recovery, and penalty imposition.

Issue 1: Allegation of inappropriate Cenvat credit due to fictitious dealer addresses

The appellants procured MS Ingots for manufacturing final products and availed Cenvat credit from registered dealers. Show cause notices were issued as the dealer addresses were found fictitious, leading to disallowance of Cenvat credit u/s Rules 7(2)/Rule 9(3) of the Cenvat Credit Rules, 2002/2004. Adjudicating authority confirmed the demand, ordered interest recovery, and imposed penalties.

Issue 2: Appellant's defense and submissions

Appellant's counsel argued that the appellants purchased inputs from registered dealers with proper invoices, and any falsity in dealer addresses cannot be attributed to the appellants. They contended that they complied with Rule 7(2) and Rule 9(3) by ensuring duty payment on inputs. Cited precedents from Punjab and Haryana High Court and Gujarat High Court to support their case.

Issue 3: Revenue's stance and lack of evidence

Revenue argued that appellants failed to prove eligibility for Cenvat credit as per Rule 7(3) by not verifying supplier details after a dealer relocated. Lack of evidence to show reasonable steps taken by appellants to confirm supplier identity and address post-relocation was highlighted.

Issue 4: Tribunal's analysis and decision

Tribunal noted that the main contention was the denial of Cenvat credit due to alleged failure in verifying eligibility. However, it was found that the duty-paid inputs were received and consumed by the appellants, with no dispute on the correctness of dealer invoices. Precedents from Punjab and Haryana High Court and Gujarat High Court were cited to support the appellants' case. Consequently, the impugned orders were set aside, and appeals were allowed with any consequential relief.

Separate Judgment by Judges:
None