2019 (9) TMI 1588 - AT - Central Excise

CENVAT Credit - duty paying invoices - invoices of dealer for inputs - allegation is that the cenvatable invoices of non-ferrous metals issued to the manufacturers of excisable goods without physical delivery of the goods - HELD THAT - The facts herein are squarely covered by the precedent decision of this Tribunal in the case of Multimetals Ltd. Others vs. CCE ST, Udaipur 2018 (5) TMI 818 - CESTAT NEW DELHI , where it was held that In the instant case, it appears that the appellant has availed the cenvat credit on the basis of such duty paying documents and cleared the goods manufactured on payment of duty, which was accepted by the department without any objection. In the facts of the present case also, it is found that the appellant Shri Shiv Kumar Garg whose statement was recorded by Revenue on 25.04.2016 has categorically stated that they have received the goods alongwith cenvatable invoices. Even on being confronted with the statement of Shri Amit Gupta and of the transport company, Shri Shiv Kumar Garg maintained the stand as they have physically received the goods that the same were entered in RG-23A Part I and II register, and the payments for inputs were made through letter of credit, a copy of which is provided to the department - the appellant has sufficiently established that they have received the inputs alongwith duty paying documents, thus, taking of credit is under the scheme of the Act and as per the Rules. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the Cenvat credit availed on the invoices of the dealer for inputs was rightly taken.
2. Whether the show cause notice was barred by time.
3. Whether the appellant received the goods physically.
4. Whether the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is applicable.
5. Whether the statements of third parties without cross-examination are admissible.

Issue-wise Detailed Analysis:

1. Whether the Cenvat credit availed on the invoices of the dealer for inputs was rightly taken:
The appellant, M/s Reliable Industries, availed Cenvat credit based on invoices from dealers. The Department alleged that these invoices were issued without the physical delivery of goods, based on statements from Shri Amit Gupta and other transporters. The Tribunal found that the appellant had received the goods along with the Cenvatable invoices, entered them in RG-23A Part-I and II registers, and made payments through proper banking channels. The appellant also manufactured finished goods and cleared them on payment of duty, which was recorded in ER-1 returns. The Tribunal concluded that the appellant had sufficiently established the receipt of inputs along with duty-paying documents, thus taking credit under the scheme of the Act and Rules.

2. Whether the show cause notice was barred by time:
The appellant argued that the show cause notice issued for the period prior to 04.08.2011 was barred by time as it was issued after five years from the date of the transaction, beyond the extended period of limitation as per Section 11A(4) of the Central Excise Act, 1944. The Tribunal noted that the appellant had been filing monthly returns regularly, and the Department had failed to establish suppression of facts or fraud within the normal period of one year. Hence, the extended period of limitation was not applicable.

3. Whether the appellant received the goods physically:
The appellant maintained that they received the goods physically, which were duly accounted for in their records. The Tribunal observed that no physical verification of stock was done, and no shortage of physical stock was identified. The Department's case was primarily based on statements from third parties, which were not corroborated with any other evidence. The Tribunal held that the appellant had demonstrated the receipt of goods and their subsequent use in manufacturing finished products.

4. Whether the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is applicable:
The Tribunal cited precedents, including the case of CCE, Jaipur vs. Pushp Enterprises, where it was held that when the assessee is filing returns regularly, it does not amount to suppression of facts. The Tribunal concluded that since there was no positive mis-declaration by the appellant and the facts were declared in the monthly returns, the extended period of limitation was not invokable.

5. Whether the statements of third parties without cross-examination are admissible:
The Department's case relied heavily on the statements of Shri Amit Gupta and other transporters. However, the Tribunal noted that no cross-examination of these witnesses was provided to the appellant. One of the witnesses, Shri Sanjeev Maggu, retracted his earlier statement. The Tribunal emphasized that the appellant's transactions were recorded in their books of accounts and inventory records, and the Department did not make any inquiry from the appellant's customers. The Tribunal held that the case made out by the Department was not sustainable legally on facts and in the eyes of law.

Conclusion:
The Tribunal allowed the appeals, set aside the impugned order, and held that the appellant was entitled to consequential benefits in accordance with law. The Tribunal emphasized that the appellant had established the receipt of inputs along with duty-paying documents, and the Department's reliance on third-party statements without cross-examination was insufficient to prove the allegations.

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