2019 (10) TMI 1353 - AT - Central Excise

CENVAT Credit - duty paying documents - contention is that there is no evidence whatsoever in the entire show-cause notice that they know or had the knowledge that the duty paying documents were not proper and valid and any irregularities at the end of the supplier - HELD THAT - The Department did not submit anything to controvert the contention of the appellant that they availed cenvat credit on the basis of invoices issued by the manufacturer having Central Excise Registration. They have paid the amount by Account Payee Cheques and the machines are in existence in the factory of the appellant. The Tribunal in the case of SUNVIK STEELS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE BANGALORE 2011 (8) TMI 926 - CESTAT BANGALORE has allowed the appeal of the assessee in respect of goods supplied by the same supplier. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit without actual receipt of capital goods
- Allegation of improper documentation and irregularities by the supplier
- Appeal against the demand of payment and penalties imposed

Analysis:

Issue 1: Availment of cenvat credit without actual receipt of capital goods
The appellant procured various components and parts for setting up new plants from a manufacturer, availing cenvat credit based on invoices from a registered supplier. The appellant ensured the existence and credibility of the supplier, paid through cheques, and received goods under Central Excise invoices. The Tribunal found no evidence of knowledge about improper documents or irregularities. The machines were physically present in the factory, supporting the appellant's claim. Citing a previous case, the Tribunal ruled in favor of the appellant, emphasizing the importance of reasonable steps taken by the buyer to ensure duty payment on inputs.

Issue 2: Allegation of improper documentation and irregularities by the supplier
The Department alleged that the appellant availed cenvat credit without actual receipt of goods, leading to a demand notice. However, the appellant demonstrated due diligence in verifying the supplier's credentials, payment through cheques, and physical presence of machines in the factory. The Tribunal highlighted the lack of evidence to counter the appellant's contentions, ultimately dismissing the allegations based on the principles of reasonable steps taken by the buyer and the presumption of duty payment by the supplier.

Issue 3: Appeal against the demand of payment and penalties imposed
The appellant challenged the demand notice, penalties, and interest imposed by the Adjudicating Authority. After reviewing the facts and arguments presented, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal. The decision aligned with the judgment of the Hon'ble High Court of Allahabad, emphasizing the importance of reasonable diligence by the buyer in verifying duty payments and entitlement to claim cenvat credit based on genuine transactions.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the significance of reasonable steps taken to ensure duty payment on inputs and justifying the availed cenvat credit. The judgment highlighted the buyer's responsibility to verify supplier credentials and documentation while affirming the legality of the appellant's actions in this case.