2016 (6) TMI 404 - AT - Central Excise

Denial of credit - transport documents and the check post details raised a serious question regarding the bonafidiness of the transport of duty paid inputs lying in stock at their Gurgaon unit and later transported to the new Bhiwadi unit - Held that - There is no dispute regarding the raw material account and other statutory records maintained both at Gurgaon unit and Bhiwadi unit. When the licence was surrendered for Gurgaon unit, the officers conducted verification of records regarding input receipt credit availability etc. and finally the surrender of certificate was accepted on 18/2/2008. The truck numbers in the GR forms issued by the transport were apparently not correct. This by itself does not establish the non-transport of goods. The claim of the appellant that the usual practice of the transporters is to indicate some truck numbers as per the initial plan or to get business and later transport the goods through other own vehicles or arranged vehicles. I find that the discrepancy in the truck numbers alone cannot lead to the conclusion of non-transport/non-receipt of duty paid inputs in Bhiwadi unit in the absence of clear evidence regarding improper diversion of the said items. The material receipt record and the statutory records maintained at Bhiwadi cannot be easily discounted. Certain duty paid inputs have in fact been cleared to some buyers as such. There has been no verification to check up the correctness of such transaction. In the absence of any allegation such transactions are to be admitted as correct and supporting the contention of the appellant at least partially. Regarding the stamp on the check post, it is noted that the inter-stage movement of goods have been recognized by the concerned Sales Tax Authorities and the assessment for the material period have been completed factoring the inter-stage movement of the impugned inputs to Bhiwadi unit. The denial of credit is mainly sought to be made on various purported discrepancies in the GR forms, date of invoices and actual receipt of goods in Bhiwadi unit. Though certain enquiries conducted by the Department raised certain suspicion in this case, there is no categorical conclusion to the enquiry through a finding that the duty paid inputs have been diverted to place other than their Bhiwadi unit or the production and other records of Bhiwadi unit do not reflect the correct position. Too many un-filled gaps in the case makes the proceeding before lower Authorities as unsustainable.- Decided in favour of assessee

Summary

Issues:
Appeal against order denying Cenvat credit on transferred inputs from Gurgaon to Bhiwadi.

Analysis:
The main issue in this case pertains to the denial of Cenvat credit amounting to ?36,43,618/- by the appellant for inputs transferred from their closed Gurgaon unit to the new Bhiwadi unit. The Revenue initiated proceedings against the appellant, alleging that the credit was availed based on paper transactions without the actual receipt of inputs in Bhiwadi. The Original Authority denied the credit and imposed penalties, which were upheld by the Commissioner (Appeals), leading to the filing of the present appeals.

The appellant argued several points in their defense. Firstly, they highlighted the closure of the Gurgaon unit in June 2007 and the proper transfer of inputs to the Bhiwadi unit. They emphasized that the final products were manufactured and cleared from Bhiwadi, with all transferred inputs duly recorded in statutory registers. The appellant also pointed out that some transferred items were cleared to buyers, which was not disputed. They contended that the denial of credit was based on discrepancies in transport documents, particularly truck numbers and check post stamps, which should not invalidate the credit claim.

On the other hand, the Revenue reiterated that the transport of inputs from Gurgaon to Bhiwadi was questionable, as the lorries listed in documents were not used for transportation. They argued that the check post stamps appeared to be non-genuine, raising doubts about the actual movement of goods. However, after hearing both sides and examining the records, the Tribunal found certain crucial factors relevant to the case.

The Tribunal noted that there was no dispute over the maintenance of records at both units and the surrender of the Gurgaon unit's license after due verification. They acknowledged that discrepancies in truck numbers did not conclusively prove non-transport of goods, especially considering the standard practice of transporters to change vehicles for delivery. Additionally, the Tribunal observed that some inputs were indeed cleared to buyers, without any verification challenges. The recognition of inter-stage movement by Sales Tax Authorities further supported the legitimacy of the transfers.

In conclusion, the Tribunal set aside the lower authorities' order, allowing the appeals due to insufficient evidence supporting the denial of credit. The decision was based on the lack of concrete findings proving diversion of inputs or inaccuracies in the production records of the Bhiwadi unit, rendering the proceedings unsustainable.

This detailed analysis encapsulates the key arguments, counterarguments, and critical factors considered by the Tribunal in reaching its decision to overturn the denial of Cenvat credit on transferred inputs in this case.