2013 (8) TMI 127 - AT - Central Excise

Cenvat Credit on HR Coils Lack of investigation and evidence - The invoices issued by the registered dealers M/s. Rishav Trading & M/s. Bansal Structurals mention that M/s. Pasondia Steel Profiles Ltd. had supplied the HR Coils to M/s. Rishav Trading and M/s. Bansal Structurals. Though statements of, Proprietor of M/s. Rishav Trading and Director of M/s. Bansal Structurals were recorded, there is nothing in these statements from which it can be inferred that they had not purchased HR Coils from M/s. Pasondia Steel. What they have admitted is the fictitious nature of their transactions with M/s. Pasondia Steel regarding CR Strip & CR Sheets. But their statements are totally silent about their transactions regarding purchase of HR Coils from M/s. Pasondia Steel. On this point neither any questions was put to them, nor have they made any statement. Thus, the statements of Proprioter/Director of the abovenamed company do not in any manner support the Department s allegation with regard to HR Coils Held that - Invoice issued by the registered dealers mentioned the Truck Nos. in which the goods covered under the invoices had been transported. But absolutely no enquiry has been conducted with the truck owners. The entire case of the Department against the Respondent relies upon the evidence with regard to fictitious nature of the transactions of M/s. Pasondia Steel regarding the supply of CR Sheets by showing their bogus productions and bogus sale. But this evidence is of no relevance to the case where the claim of the respondent is they have purchased HR Coils from two dealers i.e. M/s. Rishav Trading & M/s. Bansal Structurals, who, in turn, claim that the HR Coils in question, had been purchased by them from M/s. Pasondia Steel - There is no evidence produced by the Department to show that M/s. Pasondia Steel had not sold any HR Coils to these two registered dealers Decided against the Revenue.

Summary

Issues:
1. Validity of Cenvat Credit availed by the respondent on HR Coils purchased from registered dealers.
2. Allegation of bogus transactions between registered dealers and M/s. Pasondia Steel.
3. Dispute regarding the authenticity of transactions involving HR Coils.

Analysis:
1. The case revolves around the respondent availing Cenvat Credit on HR Coils purchased from registered dealers, M/s. Rishav Trading and M/s. Bansal Structural. The Department alleged that the transactions were bogus due to suspicions regarding the source of HR Coils. The Additional Commissioner confirmed the demand for Cenvat Credit repayment and imposed penalties. However, the Commissioner (Appeals) set aside this decision, stating a lack of evidence to prove the transactions were fraudulent.

2. The Department contended that transactions between the registered dealers and M/s. Pasondia Steel, the alleged source of HR Coils, were bogus. They argued that if these transactions were fake, then the dealings between the dealers and the respondent must also be false. The Department highlighted discrepancies in statements made by the dealers and emphasized the lack of direct dealings with M/s. Pasondia Steel, suggesting the transactions were dubious.

3. The respondent maintained that they legitimately purchased HR Coils from the registered dealers, who claimed to have sourced them from M/s. Pasondia Steel. They argued that the Cenvat Credit Rules allowed for the clearance of inputs with credit reversal. The respondent emphasized that there was no concrete evidence to prove the HR Coils were not received, pointing out that the statements of the dealers only admitted to fictitious transactions regarding CR Strips/Sheets, not HR Coils. The respondent asserted that the Department's evidence against M/s. Pasondia Steel's bogus transactions was irrelevant to the HR Coils case.

4. The Tribunal analyzed the evidence and statements provided by both parties. It noted that while the invoices mentioned the source of HR Coils and truck details, no inquiry was made with the truck owners. The Tribunal found that the Department's case relied on proving the fictitious nature of transactions involving CR Sheets by M/s. Pasondia Steel, which did not directly relate to the HR Coils purchased by the respondent. Ultimately, the Tribunal concluded that there was no evidence to support the Department's claim that the transactions involving HR Coils were bogus, dismissing the Revenue's appeal.