2014 (12) TMI 587 - AT - Service Tax

Denial of CENVAT Credit - Credit denied to them on the ground that on verification, the premises registered in the name of said registered dealer were found to have been taken on rent by him on the basis of a fake and bogus rent deed - Cancellation of dealership - Held that - Revenue having granted registration to M/s. Rohit Ispat and the appellant having satisfied themselves about the registration, procured the goods from the said registered dealers. The act of transportation of the goods stand established from the payment of service tax by the appellant on the GTA services so received by them. As such, the provisions of Cenvat Credit Rules stand satisfied. Revenue has also not established any alternative source of procurement of inputs. The appellants having procured the inputs from the registered dealer, having reflected the same in their RG-23A Part-I and having utilized the same in the manufacture of final product, cleared on payment of duty, are entitled to benefit of Cenvat credit of the same. Accordingly, I set aside the impugned order and restore the order of original adjudicating authority. - Decided in favour of assessee.

Summary

Issues: Denial of Modvat credit on the basis of fake rent deed; Shifting of onus to show receipt of goods when dealer not operating from registered premises; Validity of registration and procurement of goods from registered dealer.

The judgment addresses the denial of Modvat credit amounting to Rs. 2,95,165 by the appellant due to a fake rent deed issue with a registered dealer, M/s. Rohit Ispat. The appellant's credit was disallowed as the dealer's registration was retrospectively canceled based on the fake rent deed. The original adjudicating authority initially dropped the proceedings, noting evidence of transportation of inputs and payment of service tax on GTA services, refuting the Revenue's claim of paper transactions by M/s. Rohit Ispat.

The Revenue appealed to the Commissioner (Appeals), who shifted the onus to the assessee to prove receipt of goods when the dealer was not operating from the registered premises. However, the appellate tribunal found that the original adjudicating authority had thoroughly examined the evidence and correctly relied on Tribunal decisions. The appellant contended that the dealer's registration was legitimate, granted after physical verification, and the Revenue's claim of non-operation from the rented premises was solely based on the owner's statement, which was disputed by M/s. Rohit Ispat.

The tribunal concluded that since the appellant had procured goods from a registered dealer, reflected in their records, and utilized them in manufacturing final products cleared with duty payment, they were entitled to Cenvat credit. The act of transportation was confirmed by the payment of service tax on GTA services, satisfying the Cenvat Credit Rules. As the Revenue failed to establish an alternative procurement source, the tribunal set aside the Revenue's decision and reinstated the original adjudicating authority's order, allowing the appeal and granting consequential relief to the appellants.