2010 (11) TMI 309 - AT - Central Excise

Cenvat credit - Documents for availing cenvat credit - The denial of credit on the sole ground that the vehicle numbers were not found to be genuine cannot be made the basis for arriving at a finding against the assessee - The respondent s contention that the consideration for the goods was paid through cheques, freight payments were made by vouchers and there is no other evidence on record - Held that that wrong vehicle numbers cannot be made the basis for denial of credit where the payments for the inputs have been made by cheque, inputs are entered in records used in the manufacture of the final product, which were cleared on payment of duty - Decided in favour of assessee.

Summary

Issues:
Dispute over modvat credit availed based on invoices with discrepancies in vehicle numbers and existence of transporter.

Analysis:
The judgment involves a dispute regarding modvat credit availed by a manufacturing unit for non-alloy steel ingots. The Revenue alleged discrepancies in the invoices issued by a registered dealer, claiming that the mentioned vehicle numbers were fake and the transport company was non-existent. This led to proceedings against the manufacturing unit, resulting in a demand for duty and imposition of penalties. The Commissioner (Appeals) set aside the orders, prompting the Revenue to appeal.

The respondent contended that despite discrepancies in vehicle numbers, there was no evidence to prove that the inputs were not received. They maintained that the inputs were duly recorded in their stock register, payments were made through cheques, and they provided supporting documents like GRs and freight payment vouchers to prove receipt of goods. The respondent argued that the Revenue's case of diversion was based on assumptions, lacking concrete evidence of actual diversion to other units.

The Commissioner (Appeals) accepted the respondent's submissions, emphasizing that the Revenue failed to provide corroborative evidence of diversion. Citing a previous case, the Commissioner highlighted that payments made through banking channels and absence of alternative raw materials supported the respondent's position. Consequently, the Commissioner set aside the penalty imposed on the dealer as well.

The Revenue reiterated the original grounds for denying credit, primarily focusing on discrepancies in vehicle numbers. However, the absence of substantial evidence indicating non-receipt or diversion of inputs weakened their case. The respondent's diligent record-keeping, payment methods, and lack of contradictory evidence tilted the balance in their favor. The judgment concluded that the denial of credit solely based on incorrect vehicle numbers was unjustified, especially when the inputs were properly accounted for and utilized in manufacturing final products cleared with duty payments.

In light of the above analysis, the judgment rejected the Revenue's appeals, affirming the Commissioner (Appeals)'s decision. The judgment emphasized the importance of concrete evidence and proper documentation in determining the validity of modvat credit claims, highlighting the need for a strong evidentiary basis to support allegations of non-compliance or diversion.