2015 (7) TMI 224 - AT - Central Excise

Denial of CENVAT Credit - Bogus invoices - Invoices issued without actual receipt of goods - Held that - On perusal of the Compilation of documents, showing correlation of the goods received from M/s. Annapurna and return of semi-finished goods, I find that the appellant had produced copy of invoices of M/s. Annapurna along with transport documents and Bills of labour charges paid to the job workers - The job worker issued Bills for labour charges alongwith delivery challans issued from time to time. It is particularly noted that purity check result of the goods by electrolysis method was recorded in the printed form of the appellant. These evidences were not refuted by the lower authorities. I find that the charge of availment of cenvat credit on the basis of invoices without receipt of the goods was on the basis of statements of various persons. The appellant refuted the charges particularly by showing various evidences of receipt of goods, Lorry Receipt, Purity Check report, Payment of Labour Bills and other details, which were not disputed by the lower authorities. Cenvat credit cannot be denied on the ground of non-receipt of inputs when the Tribunal found that department is not able to prove that any alternative raw material was received and used in the final products. The Tribunal has also noted that the findings of the Commissioner established that RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the modvat credit has been availed and utilised and that payments of the purchase of inputs have been made through cheque/ demand draft. In the present case, I find that appellant had produced several evidence in respect of receipt of inputs and the same were not disputed and the officers proceeded merely on the basis of statements and in this situation, denial of cenvat credit cannot be sustained. - appellant produced documents that M/s. Annapurna was in existence during the material period as established by their invoices and the Central Excise monthly returns. So, the appellant has discharged their responsibility and therefore, CENVAT credit availed on the basis of invoices of M/s. Annapurna cannot be denied. - Decided in favour of assessee.

Issues Involved:
1. Wrongful availing of CENVAT credit.
2. Existence and legitimacy of M/s. Annapurna Impex Pvt. Limited.
3. Correlation of goods received and processed.
4. Validity of evidence and statements used by the adjudicating authority.

Detailed Analysis:

1. Wrongful Availing of CENVAT Credit:
The appellants were accused of availing CENVAT credit amounting to Rs. 11,59,698/- based on invoices issued by M/s. Annapurna without actually receiving the inputs. A show cause notice was issued, and the adjudicating authority denied the CENVAT credit, confirmed the demand of duty along with interest, and imposed a penalty of an equal amount. The Commissioner (Appeals) upheld this decision. However, the appellant argued that the materials were purchased from M/s. Annapurna and sent directly to job workers for processing, with the entire transaction recorded in CENVAT and other statutory records. The appellant produced documents showing the correlation between goods received from M/s. Annapurna and the processed goods returned by job workers.

2. Existence and Legitimacy of M/s. Annapurna Impex Pvt. Limited:
The authorities claimed that M/s. Annapurna was a non-existing firm with no plant or machinery to manufacture copper bars/ingots and only issued invoices without actual goods. However, the appellant provided a letter dated 31.07.2012 from the Assistant Commissioner (Preventive) of Ludhiana, confirming that M/s. Annapurna was in existence during the material period, issued invoices, and paid duty. This evidence contradicted the findings of the Commissioner (Appeals).

3. Correlation of Goods Received and Processed:
The appellant submitted documents, including invoices, transport documents, and bills of labor charges, to show the correlation between the goods received from M/s. Annapurna and the processed goods returned by job workers. For example, credit was availed on Copper Wire Bars transported by New Satkar Tempo Transport Union and delivered to job workers, who issued bills for labor charges along with delivery challans. These evidences were not refuted by the lower authorities. The Tribunal noted that the appellant had shown compliance with the Central Excise Rules, 2002, and Cenvat Credit Rules, 2004.

4. Validity of Evidence and Statements Used by the Adjudicating Authority:
The Commissioner (Appeals) heavily relied on the statement of M/s. Annapurna's broker, which was not corroborated with any evidence. The statements of Agandias were also not corroborated with evidence regarding the invoices in question. The appellant refuted the charges by showing various evidences of receipt of goods, lorry receipts, purity check reports, and payment of labor bills. The Tribunal in the case of Super Trading Company vs. CCE, Delhi, held that the recipient of inputs is expected to know their immediate supplier, and there is no further requirement to investigate the supplier's source of inputs. The Tribunal found that the appellant had produced several pieces of evidence regarding the receipt of inputs, which were not disputed by the authorities, and therefore, denial of CENVAT credit could not be sustained.

Judgment:
The Tribunal concluded that the impugned orders could not be sustained due to the appellant's production of sufficient evidence showing the receipt of inputs and compliance with the Central Excise Rules. The appeal filed by the appellant was allowed with consequential relief, and the impugned order was set aside.

Order Pronounced:
(Order pronounced in the Court on 02.07.2015)

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