2016 (6) TMI 1256 - AT - Central Excise

CENVAT credit - inputs - Plastic Granules - period October 2005 to Dec 2007 - fake invoices - it was alleged that the firms owned by Shri Mukesh Sangla issued cenvatable invoices to Appellant firm without actual delivery of goods - Held that - the demand is made on the basis of records and statements of employees/ Director of M/s Signet Overseas Ltd. The document and data relied upon was maintained mainly by Shri Kirti Kala Cashier of M/s Signet Overseas Ltd. I find that these records were not maintained by M/s Signet Overseas Ltd. in regular course of business. Further I find that the documents/ records relied upon by the revenue pertain to M/s Signet Overseas Ltd. have not been corroborated from any independent evidences. The same is nowhere corroborating with any evidence from the Appellant s record or documents. The investigation has not brought any incriminating documents from the Appellant. None of the transporters have been questioned to ascertain whether any goods were diverted enroute to Appellant Unit. In absence of any investigation to that effect I am of the view that the goods were received by the Appellant unit. Confirmation of demand and imposition of penalty by the authorities below are not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Availment of Cenvat credit on inputs namely, Plastic Granules for the period October 2005 to Dec 2007.

Analysis:
The Appellant, engaged in manufacturing Polythene Bags and Sheets, availed Cenvat credit on inputs but faced a dispute regarding the credit on Plastic Granules. The show cause notice alleged that the Appellant availed credit on invoices without actual delivery of goods, diverting them to another location. The Additional Commissioner confirmed the demand and penalty, upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

The Appellant's counsel argued that the evidence against them was from third parties, not corroborated by their records. They emphasized that no incriminating records were found in their factory, and all transactions were legitimate. The Appellant's position was supported by various judgments, highlighting the lack of concrete evidence against them.

The Tribunal noted that the demand was based on records and statements from individuals associated with another company, not maintained in the regular course of business. Lack of corroboration with the Appellant's records raised doubts about the allegations. The Tribunal also found discrepancies in the statements of the transporter and confirmed that most consignments were directly received by the Appellant, with no evidence of diversion.

Referring to similar cases from the same investigation, where demands were set aside or appeals dismissed, the Tribunal concluded that the confirmation of demand and penalty were unjustified. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the Appellant.