2015 (10) TMI 960 - AT - Central Excise

Denial of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of invoices - Held that - In respect of Date on which M/s. RRB Chemicals obtained registration as registered dealer, the only objection of the Department is that M/s. RRB Chemicals were issuing invoices regarding sale of the G.P. sheets to M/s. AMPL without actually unloading of the goods in their premises and were actually dispatching the goods to M/s. AMPL. In this case also, it is not the case of the Department that M/s. AMPL did not receive the consignments of G.P. sheets covered under the invoices issued by RRB Chemicals. Rather it is the Department s case that M/s. AMPL were receiving the consignments of G.P. sheets directly from ACCIL under the invoices of the RRB Chemicals. When the receipt of the goods by AMPL which are covered under the invoices issued by RRB Chemicals is not denied, it would not be correct to deny the Cenvat credit to M/s. AMPL and impose penalty on them as well as on M/s. RRB Chemicals. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Availment of Cenvat credit by M/s. RRB Chemicals for G.P. sheets.
2. Denial of Cenvat credit to M/s. AMPL.
3. Imposition of penalties on M/s. RRB Chemicals and M/s. AMPL.

Analysis:

Issue 1: Availment of Cenvat credit by M/s. RRB Chemicals for G.P. sheets
M/s. RRB Chemicals, a manufacturer of Zinc Oxide, availed Cenvat credit for inputs used in manufacturing Zinc Oxide. They also acted as a consignment agent for G.P. sheets. Initially, they did not have separate registration as a dealer for G.P. sheets. The Department contended that G.P. sheets were not being unloaded at RRB Chemicals' premises and were directly supplied to M/s. AMPL by ACCIL. However, M/s. AMPL received the goods covered under RRB Chemicals' invoices. The Tribunal held that denying Cenvat credit and imposing penalties on M/s. AMPL and RRB Chemicals was unjustified as there was no evidence to show that the goods were not received by M/s. AMPL.

Issue 2: Denial of Cenvat credit to M/s. AMPL
Post obtaining separate dealer registration, the Department argued that G.P. sheets were not physically unloaded at RRB Chemicals' premises before being dispatched to M/s. AMPL. Despite this, M/s. AMPL received the goods as per RRB Chemicals' invoices. The Tribunal found that since M/s. AMPL did receive the goods, denying Cenvat credit and imposing penalties on both parties was unwarranted. The Department's contention that M/s. AMPL received goods directly from ACCIL under RRB Chemicals' invoices was not sufficient to deny Cenvat credit.

Issue 3: Imposition of penalties on M/s. RRB Chemicals and M/s. AMPL
The Tribunal set aside the Commissioner's orders denying Cenvat credit and imposing penalties on M/s. AMPL and RRB Chemicals. It was held that since the goods were received by M/s. AMPL as per the invoices issued by RRB Chemicals, denying Cenvat credit and penalties was not justified. The Tribunal allowed the appeals, setting aside the Commissioner's orders and restoring RRB Chemicals' registration as a dealer.

In conclusion, the Tribunal ruled in favor of M/s. AMPL and RRB Chemicals, overturning the Commissioner's orders and reinstating their rights to avail Cenvat credit for the G.P. sheets.