2018 (7) TMI 2261 - AT - Central Excise

CENVAT Credit - fraudulent availment of credit - it is alleged that unit is set up in Jammu with a mala fide intention to avail area based exemption provided under Notification No. 56/2002-CE dated 14.11.2002 and to pass on the Cenvat credit to the buyers of copper ingots - HELD THAT - The consignment note issued by the transporter contained the reference of the invoice, quantity, description of goods etc. It is also found that the transport documents, evidencing movement of goods from the State of J K to destination point has also been endorsed with proper certification. Thus, it is not the case of Revenue that the goods in question, during the disputed period were not transported from the factory of M/s VKM to the appellant s manufacturing unit. Further, it is also found that based on the investigation conducted by the DGCEI in the premises of M/s VKM, the proceedings were initiated against the appellant, alleging fraudulent availment of Cenvat credit. Since, the order confirming the demands against M/s VKM has already been set aside by the Tribunal in VINOD KUMAR JAIN VERSUS C.C.E. S.T. -JAMMU KASHMIR AND OTHERS 2018 (5) TMI 1512 - CESTAT NEW DELHI on the ground that it had manufactured the impugned goods in its factory, it is opined that the adjudged demands confirmed against the appellant cannot be sustained for judicial scrutiny. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Fraudulent Cenvat benefit availed by the appellant based on invoices without receipt of inputs.

Analysis:
The appeal was against the order passed by the Commissioner (Appeals) GST & CX, Mumbai, disallowing CENVAT Credit and confirming interest liability and penalty on the appellant. The department alleged that the appellant availed fraudulent Cenvat benefit by receiving invoices without actual receipt of inputs. The matter was adjudicated, resulting in disallowance of CENVAT Credit and imposition of penalties. The Commissioner (Appeals) upheld the demands confirmed on the appellant.

The appellant's consultant argued that a similar case against M/s VKM was decided in favor of the appellants by the Tribunal, where the department failed to prove non-manufacture of copper ingots. The consultant contended that since the investigation against the appellant was based on the same premises visit, the confirmed demands could not be sustained. Additionally, consignment notes were presented to support the movement of goods from Jammu & Kashmir to Maharashtra, asserting that the disputed goods were received, accounted for, and utilized in the final product's manufacture.

After hearing both sides and examining the case records, the Tribunal found that the consignment notes and transport documents confirmed the movement of goods from VKM's factory to the appellant's unit. Considering the Tribunal's previous decision in favor of VKM, where the department failed to prove fraudulent activity, the Tribunal concluded that the demands against the appellant could not be upheld. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.