2018 (11) TMI 1760 - AT - Central Excise

CENVAT Credit - fake inputs - case of Revenue is that vehicle number used for transportation of the goods are fake - HELD THAT - The appellants have produced newspaper cuttings and police report to show that during that period, the transporters were using the fake vehicle numbers to avoid toll tax, road tax, and other local tax and that issue was taken with police as well as transport authority. These facts are not in dispute in adjudication order itself by the adjudicating authority as mentioned that there were almost 500 vehicles involved in such type of activity but the adjudicating authority has not examined whether all 500 vehicles involved in such activity, therefore, the benefit of doubt goes in favour of the appellants who are able to show that these goods have been properly recorded in the stock and after manufacturing the goods, they have cleared the same on payment of duty. When these facts are not disputed, therefore, the credit to the manufacturer-buyer on the goods in question cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of credit on inputs due to alleged fake vehicle numbers used for transportation.

Analysis:
The case involved the appellants procuring inputs from a main manufacturer through a registered dealer for manufacturing final products. Revenue alleged that the vehicle numbers used for transportation were fake, leading to investigations and show cause notices. Previous rounds of litigation resulted in remanding the matter back to the adjudicating authority for further examination. In the remand proceedings, both authorities denied credit to the appellants based on lack of evidence regarding the receipt of inputs and the authenticity of vehicle numbers. The appellants appealed these decisions.

Upon hearing both sides, it was noted that the denial of credit was primarily based on the alleged incapability of the vehicle numbers mentioned in the invoices for transporting goods. The appellants presented newspaper cuttings and a police report to demonstrate that transporters were using fake vehicle numbers to evade taxes during that period. The adjudicating authority acknowledged the existence of such activities but failed to verify if all 500 vehicles involved were engaged in such practices. As the appellants had properly recorded the goods in stock and cleared them after manufacturing, with no dispute on these facts, the benefit of doubt favored the appellants. Consequently, the credit was allowed, and no penalties were imposed.

In conclusion, the impugned orders denying credit on inputs were set aside, and the appeals were allowed with consequential relief. The judgment emphasized the importance of examining all evidence presented and ensuring a fair assessment before denying credit to the manufacturer-buyers based on allegations related to vehicle numbers used for transportation.