2014 (2) TMI 494 - AT - Central Excise

Demand and penalty - Denial of Cenvat Credit of duty paid for inputs - Non-production of ST XXVI-A forms in view of conflicting record maintained by assessee such as payments made by cheque/drat to suppliers for receipt of raw materials - Held that - non-production of ST XXV I-A forms of sales department verifying entry of vehicles to Himachal Pradesh where factory located raising presumption of non-receipt of goods held by Tribunal in identical cases that credit do not to be denied on sole ground of non-production of ST XXVI-A forms in view of conflicting record maintained by assessee such as payments made by cheque/drat to suppliers for receipt of raw materials. No inquiry made by Revenue from supplier in instant case. Information from Sales Tax Department not reliable as some ST XXVI-A forms produced by assessee declared not available by said department. Demand and penalty set aside as not sustainable - Following decision of Himalayan Pipe Industries Vs. CCE, Chandigarh 2013 (12) TMI 216 - CESTAT NEW DELHI - Decided against Revenue.

Summary

Issues:
Denial of Cenvat Credit based on non-entry of inputs in Sales Tax records enroute to the factory.

Analysis:
The judgment addresses the denial of Cenvat Credit by the Adjudicating Authority based on the absence of records of input movement in Sales Tax authorities. The Commissioner (Appeals) set aside the orders of the Adjudicating Authority, emphasizing that Central Excise Law does not mandate the production of ST-XXVI-A forms for input receipt verification. The Commissioner noted the Appellant's payment through Account Payee Cheques to suppliers, which were realized, indicating the receipt and use of inputs in manufacturing. Documentary evidence, including invoices and statutory records, supported the Appellant's claims.

The Department's contentions lacked documentary evidence and relied on presumption and assumption, deemed legally insufficient. The Appellant's evidence, including invoices, receipts, and payment records, proved input receipt and utilization. The Commissioner highlighted previous decisions in favor of the Appellants and dismissed the Department's unsupported contentions.

The Tribunal's decision in a similar case, Himalayan Pipe Industries Vs. CCE, Chandigarh, was referenced, emphasizing that non-production of ST XXVI-A forms does not justify denying Cenvat Credit. The Tribunal considered conflicting records maintained by the assessee, such as payments to suppliers via cheques, as valid evidence of input receipt. The Tribunal set aside the demand and penalty, emphasizing the lack of inquiry by the Revenue from suppliers and the unreliability of information from the Sales Tax Department.

The judgment upheld the Commissioner (Appeals) orders, citing the Tribunal's previous decisions in favor of the assessee and the dismissal of Revenue's appeals by the High Court of H.P. The Division Bench's decision favored the assessee based on precedent decisions, leading to the dismissal of Revenue's appeals due to lack of merit.

In conclusion, the judgment establishes that denial of Cenvat Credit solely based on non-entry of inputs in Sales Tax records is unjustified. It emphasizes the importance of documentary evidence, such as payment records and statutory documents, in proving input receipt and utilization for manufacturing, ultimately leading to the dismissal of Revenue's appeals.