2009 (8) TMI 1038 - AT - Central Excise

CENVAT credit - denial on the ground that the inputs were never transported by the manufacturer to the first dealer from whom the appellants have procured the same - natural justice - Held that - the appellate authority has not considered and appreciated various evidences on record which stand discussed in detail by the original adjudicating authority. He has allowed Revenue s appeal on short ground which was the basis for the issuance of show cause notice that LR do not bear the check-post stamp and the statement of the transporter. The appellants have rightly contended that statement of the transporter being in the nature of co-accused, cannot be made the sole basis for holding against the appellant, unless corroborated with material particulars. There is no such evidence on record. The assessee has produced ample evidence in the shape of documentary record to reflect upon the fact that they had actually received the inputs from the first dealer and had made payments to them through Demand Draft. In any case, the fact of non-stamping of LR is only in respect of the goods received by the registered dealer - order of original adjudicating authority restored - credit allowed - appeal allowed. MODVAT credit - denial on the ground that the inputs such as copper scrap, copper wire scrap, copper rod etc. have not actually been received by them and only invoices have been issued by the dealer PMM - Held that - there is no other evidence to reflect upon the fact that the inputs were not actually received by the appellant - there is no dispute that the LRs were issued by the transporter showing the appellant as the consignee of the goods - Revenue has based his case on the Goods Register maintained by the transporter indicating the description of the goods as Miscellaneous . This fact, by itself, cannot be held to be sufficient for arriving at conclusion that the inputs were never transported to the appellant s factory. All the documentary evidence on record supports the appellant s case about the receipt of the input whereas there is no independent corroborative evidence by the Revenue produced on record - credit allowed - appeal allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat Credit to M/s. Monarch Metals Pvt. Ltd.
2. Denial of Modvat credit to M/s. Dhanlaxmi Tubes & Metals Industries

Issue 1: Denial of Cenvat Credit to M/s. Monarch Metals Pvt. Ltd.

Detailed Analysis:
The Commissioner (Appeals) denied Cenvat Credit of Rs. 2,27,180 to M/s. Monarch Metals Pvt. Ltd. due to the alleged non-transportation of inputs to the appellant's factory. The authorities concluded that the inputs never reached the factory based on the absence of records at check-posts en-route and statements from transporters. However, the appellant argued that they purchased inputs from a dealer with proper documentation and payment methods, maintaining the modvatable account. They contended that lack of check-post stamps on LR documents should not disqualify the credit claim. The appellant also challenged the transporter statements as unreliable, likening them to statements of co-accused. The original adjudicating authority dismissed the show cause notice against the appellant, considering various evidences presented by DGCEI. The authority highlighted discrepancies in the department's case, emphasizing the lack of evidence proving non-receipt of goods by the appellant from the dealer. The authority noted the absence of admissions regarding non-receipt in statements under CEA, 1944, and the failure to counter the evidence provided by the appellant, including official documents and payment records. The authority concluded that the appellant had received the goods and dropped the show cause notice.

Issue 2: Denial of Modvat credit to M/s. Dhanlaxmi Tubes & Metals Industries

Detailed Analysis:
Modvat credit of Rs. 2,83,191 was denied to M/s. Dhanlaxmi Tubes & Metals Industries (DTMI) on the grounds of alleged non-receipt of inputs, despite LR documents indicating movement of trucks to Nadiad. The lower authorities rejected the credit based on discrepancies in the delivery register of the transporter, claiming the goods were not as described. However, the appellant provided documentary evidence supporting the receipt of inputs, challenging Revenue's case for lack of corroborative evidence. The Tribunal cited precedents where credit based on dealer invoices could not be denied solely on transporter statements or discrepancies in goods description. The Tribunal emphasized the burden on Revenue to prove non-receipt with sufficient evidence. The Tribunal set aside the impugned order, allowing the appeals of M/s. Dhanlaxmi Tubes & Metals Industries with consequential relief.

In conclusion, the judgments by the Appellate Tribunal CESTAT AHMEDABAD addressed issues of denial of Cenvat Credit and Modvat credit to the respective appellants, emphasizing the importance of evidence and burden of proof in establishing non-receipt of goods for credit claims. The decisions highlighted discrepancies in the Revenue's case and the need for sufficient corroborative evidence to support denial of credits.