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2015 (11) TMI 1244 - AT - Central ExciseDenial of Cenvat Crredit - Bogus invoices - Issue of invoices without actual receipt of goods - Held that - M/s. Agarwal Metal Co. / Works is a manufacturer of brass strips/ circles and supplying the same to the Registered dealers, namely, M/s. AMCo. & AMCorpn. against duty paid invoices. Thereafter, these AMCo. & AMCorpn. are supplying the goods to manufacturer buyers and description was shown in the invoices as brass sheets instead of brass circles / strips. Apart from this evidence, no other corroborative evidence has been produced by the Revenue to allege that manufacturer buyers have received the invoices only but have not received the goods against these invoices. No investigation has been done at the end of transporter or check post to ascertain the facts against the impugned invoices, the manufacturer buyers had received goods or not. Moreover, no other corroborative evidence has been produced by the Revenue from where these goods i.e. brass sheets procured by manufacturer buyers. In the absence of any corroborative evidence, the Cenvat credit to manufacturer buyer cannot be denied. Cenvat credit cannot be denied to manufacturer buyers. Further, in the case of Delhi Control Service this Tribunal (2013 (8) TMI 921 - CESTAT NEW DELHI) has taken the same view. With these observations, the orders of denial of Cenvat credit to manufacturer buyers and consequently demand of duty along with interest are not sustainable. Therefore, the penalties on manufacturer buyers are not imposable. As in some cases, some amount has been paid by M/s. AMCo. & AMCorpn. during the course of investigation, that amount cannot be claimed by manufacturer buyer / M/s. AMCo. & AMCorpn. as refund, consequent to this order. As demand of duty against manufacturer buyers is not sustainable, consequently, penalties on manufacturer buyers cannot be imposed. - Decided in favour of assessee.
Issues Involved:
1. Demand of duty along with interest and imposition of penalties on manufacturer buyers. 2. Denial of Cenvat credit to manufacturer buyers. 3. Appeals by Revenue against dropping of demands and penalties by the Commissioner (Appeals). 4. Appeals by M/s. AMCo. & AMCorpn., Shri Sidharth Baid, and Shri Rahul Baid against penalties. 5. Appropriation of amounts paid during the investigation. Issue-wise Detailed Analysis: 1. Demand of duty along with interest and imposition of penalties on manufacturer buyers: The manufacturer buyers, including M/s. Neha Enterprises, Swiss Auto, and Bentex Motor Control Gear Industries, were subjected to demands of duty along with interest and penalties due to denied Cenvat Credit. The Tribunal found that the invoices issued by M/s. AMCo. & AMCorpn. showed the description of goods as brass sheets instead of brass circles/strips. However, there was no corroborative evidence from the Revenue to prove that the goods were not received by the manufacturer buyers. Hence, the demands of duty along with interest and penalties on manufacturer buyers were not sustainable. 2. Denial of Cenvat credit to manufacturer buyers: The manufacturer buyers took Cenvat credit based on invoices issued by AMCo. & AMCorpn., which were duty paid and contained all necessary particulars as per Rule 9 of the CCR, 2004. The Tribunal referenced the case of CCE vs. Delhi Control Device [2013 (200) ECR 340], where it was held that if the description of goods in the invoices matches the goods received and used in manufacturing, the Cenvat credit cannot be denied. Therefore, the denial of Cenvat credit to the manufacturer buyers was set aside. 3. Appeals by Revenue against dropping of demands and penalties by the Commissioner (Appeals): Revenue appealed against the orders dropping demands and penalties on M/s. Anu Industries Ltd., M/s. Estech Enterprises, M/s. Ellora Trading Ltd., and Ajay Hardware Industries Pvt. Ltd., as well as against the dropping of penalties on M/s. AMCorpn., Sidharth Baid, and Rahul Baid. The Tribunal found that the Revenue failed to provide corroborative evidence that the goods were not received by the manufacturer buyers. Consequently, the appeals by Revenue were dismissed. 4. Appeals by M/s. AMCo. & AMCorpn., Shri Sidharth Baid, and Shri Rahul Baid against penalties: The Tribunal noted that the description of goods in the invoices issued by AMCo. & AMCorpn. did not match the description in the invoices from the manufacturer supplier, which constituted a contravention of Central Excise Rules, 2002. Therefore, a penalty of Rs. 5,000 was imposed on M/s. AMCorpn. and M/s. AMCo. for each case/appeal/show cause notice. However, penalties on Shri Sidharth Baid and Shri Rahul Baid were dropped. 5. Appropriation of amounts paid during the investigation: The amounts paid by M/s. AMCo. & AMCorpn. during the investigation were appropriated. It was determined that these amounts were not refundable as they were not contested by the parties involved. Conclusion: - Appeals filed by manufacturer buyers were allowed with consequential relief. - Appeals filed by Revenue against manufacturer buyers, Shri Sidharth Baid, and Shri Rahul Baid were dismissed. - Amounts paid by M/s. AMCo. & AMCorpn. during the investigation were not refundable. - Appeals filed by Shri Sidharth Baid and Shri Rahul Baid were allowed. - Penalty of Rs. 5,000 was imposed on M/s. AMCorpn. and M/s. AMCo. for each appeal. - Cross objections filed by some parties were disposed of in the above terms.
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