2015 (4) TMI 1158 - AT - Central Excise

CENVAT credit - fake invoices - denial on the ground that the appellant have taken the Cenvat credit on the strength of invoices without receiving the goods - Held that - no corroborative evidence have been produced by the Revenue from where the appellant procured the goods, if goods were supplied to the appellant along with invoices. No stock taking was done at the end of the appellant. Therefore, without any supportive evidence Cenvat credit merely on the statement of M/s. Gupta and on the allegation of transporting vehicle cannot transport such goods, Cenvat credit cannot be denied - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on inputs procured based on allegations of invoices without goods supplied.

Analysis:
The appellant purchased Ferro alloy from a first stage dealer and availed Cenvat credit on the invoices issued. Allegations arose when an investigation revealed that the first stage dealer supplied invoices without goods. The transporter's capability to transport the goods was also questioned. Consequently, a show cause notice was issued to deny the Cenvat credit, leading to the demand of duty, interest, and penalty. Both lower authorities upheld the denial of credit and confirmed the duty demand along with penalties.

The appellant's counsel argued that no statement from the appellant was recorded, and the allegations were solely based on the transporter's statement regarding the vehicle's capacity. The appellant contended that they had received the goods, made payments through cheques, and without corroborative evidence, the Cenvat credit should not be denied. On the other hand, the Revenue argued that the first stage dealer confirmed issuing invoices without supplying goods, and the quantities mentioned were not feasible for transportation by auto rickshaw, justifying the denial of Cenvat credit.

After hearing both parties and considering the submissions, the judgment highlighted the lack of corroborative evidence from the Revenue regarding the actual supply of goods to the appellant. It was noted that no stock taking was conducted at the appellant's end. The denial of Cenvat credit was solely based on the statements of the first stage dealer and the transporter's alleged incapacity to transport the goods. The judgment concluded that without substantial evidence, merely relying on statements was insufficient to deny the Cenvat credit. Therefore, the appellant was deemed to have correctly availed the Cenvat credit, leading to the setting aside of the impugned order, and the appeals were allowed with consequential relief if any.