2014 (2) TMI 8 - AT - Central Excise

Denial of CENVAT Credit - Held that - in terms of the provision of Rule 7 of Cenvat Credit Rules, a manufacturer receiving the inputs and taking cenvat credit on the same is required to take reasonable steps about the identity and address of the manufacturer or supply. The inputs in the present case were being received by the appellant from M/s Arvind Enterprises, a second stage dealer. It is not the Revenue case that the said second stage dealer was not in existence. An assessee cannot be expected to go beyond the supplier of the goods to find out as to from where he has received the inputs or as to whether the inputs supplied to the dealer have actually been cleared on payment of duty or not by the manufacturer. The requisition of the said rule is to be satisfied about the identity and the address of the immediate supplier i.e. M/s Arvind Enterprises - Decided in favour of assessee.

Summary

Issues:
1. Cenvat credit dispute related to MS Tubes received by the appellant.
2. Allegation of non-supply of goods by the first stage dealer to the second stage dealer.
3. Denial of cenvat credit by Revenue resulting in demand confirmation and penalty imposition.
4. Reliability of statements from involved parties.
5. Compliance with Rule 7 of Cenvat Credit Rules regarding supplier identity.
6. Lack of conclusive evidence regarding non-manufacture of goods by the supplier.
7. Comparison with a previous Tribunal decision on similar grounds.

Analysis:

1. The appellant, engaged in manufacturing auto parts, received MS Tubes from a second stage dealer, leading to a dispute over cenvat credit amounting to Rs. 1,87,999 during February and March 2009.

2. Revenue officers investigated and alleged non-supply of goods from the first stage dealer to the second stage dealer, initiating proceedings against the appellant for cenvat credit denial, resulting in demand confirmation and penalty imposition.

3. The Revenue's case primarily relied on a statement from the Proprietor of the supplier firm, contested by the appellant due to the lack of direct evidence regarding non-supply of goods. The absence of statements from the second stage dealer further weakened the Revenue's position.

4. Compliance with Rule 7 of Cenvat Credit Rules was emphasized, requiring the appellant to verify the identity and address of the immediate supplier, which was the second stage dealer in this case, M/s Arvind Enterprises.

5. Lack of conclusive evidence was noted regarding the non-manufacture of goods by the supplier, M/s National Steel Tubes, with the appellant's records reflecting the utilization of received inputs in manufacturing final products cleared after duty payment.

6. A previous Tribunal decision in the appellant's favor was cited, emphasizing the importance of payment methods and lack of evidence regarding fund flow, supporting the appellant's claim for cenvat credit.

7. Considering the arguments and lack of definitive proof against the appellant, the judgment set aside the impugned order, allowing the appeal and ruling in favor of the appellant.

This detailed analysis covers the issues involved in the legal judgment, highlighting the key points and arguments presented in the case.