2015 (4) TMI 1046 - AT - Central Excise

Availing Cenvat credit without actually receiving the goods - onus to prove - modus operandi - diversion of the duty paid brass circles/strips in the open market - Held that - the only case has been booked against the respondent on the premise that M/s. AMC has diverted the goods as they have altered the description of goods in the invoices issued by them showing the goods supplied by manufacturer/supplier showing the description of goods as brass sheets. But Revenue has failed to produce corroborative evidence to show that respondent has not received the goods against the invoices issued by M/s. AMC. - Decided against the revenue.

Summary

Issues:
Revenue appeal against dropped demands confirmed against respondent, Cenvat credit availed fraudulently, Rule 9(2) of Cenvat Credit Rules, 2004 compliance, alleged diversion of duty paid goods by M/s. AMC, lack of corroborative evidence by Revenue.

Analysis:
The appeal was filed by Revenue challenging the dropped demands confirmed against the respondent regarding the alleged fraudulent availing of Cenvat credit. The case revolved around the respondent, engaged in manufacturing thermal wiring harnesses, who was accused of availing inadmissible Cenvat credit by receiving goods with altered descriptions from M/s. Arihanta Metal Corpn. The department alleged that M/s. AMC diverted duty paid brass circles/strips in the open market through fraudulent means. A show cause notice was issued, leading to the confirmation of duty demand, interest, and penalty. The respondents appealed before the Commissioner (Appeals), who set aside the order, prompting Revenue to file the current appeal.

The Revenue contended that the respondent wrongly availed Cenvat credit by receiving duty paid brass strips/circles from M/s. Agarwal Metal Works via M/s. AMC, who altered the descriptions on invoices. The Revenue argued that the respondent utilized the Cenvat credit without appropriate duty payment, violating Rule 9(2) of the Cenvat Credit Rules, 2004. They claimed collusion between the respondent and M/s. AMC, leading to the fraudulent availing of Cenvat credit. The Revenue sought to set aside the impugned order based on these grounds.

On the other hand, the respondent defended their actions, stating they had taken Cenvat credit based on invoices showing goods as brass sheets, supported by documents from M/s. AMC and the manufacturer-supplier. They argued that they followed all necessary steps as per Rule 9(2) and that the Commissioner (Appeals) rightly dropped the demand against them. The respondent maintained that they had correctly availed the Cenvat credit and should not be penalized for the alleged discrepancies.

After hearing both parties and considering the submissions, the judgment highlighted the lack of corroborative evidence from Revenue to prove that the respondent did not receive the goods against the altered invoices issued by M/s. AMC. The judgment upheld the impugned orders, finding no fault with the respondent's actions in this case. Consequently, the appeal filed by Revenue was dismissed, and the cross-objection was disposed of accordingly.