2016 (8) TMI 486 - AT - Central Excise

Cenvat credit - appellant is non-existence - invoices received instead of goods - no investigation conducted at the end of manufacturer/ supplier or the transporter to reveal the truth whether manufacturer/ supplier has supplied the goods in question to M/s S. K. Garg & Sons or the transporter has transported the goods to the premises of the appellants. Held that - M/s S. K. Garg & Sons was registered dealer during the impugned period and all the ST-3 returns were filed by M/s S. K. Garg & Sons which were accepted by the department. Therefore, in the absence of any corroborative evidence to show that the appellants have not received the goods, it cannot be alleged against the appellant that they have received the invoices and not the goods. The same issue was decided by this Tribunal in the case of CCE, Ludhiana vs. M/s Dhawan Steel Industries 2015 (10) TMI 1325 - CESTAT NEW DELHI . Therefore, by relying on the same, it is held that in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the appellants. - Decided in favour of appellant

Summary

Issues: Denial of cenvat credit on inputs due to non-existence of the dealer M/s S.K. Garg & Sons who supplied goods to the appellants.

Analysis:
The appellants filed appeals against orders denying cenvat credit on inputs supplied by M/s S.K. Garg & Sons, deemed non-existent after investigation. The premises of M/s S.K. Garg & Sons were found locked, and the landlord confirmed their vacation in 2003. The registration of M/s S.K. Garg & Sons was retrospectively canceled. The appellants procured goods from them and availed cenvat credit. Show cause notices were issued, leading to duty demand, interest, and penalties. The appellants contended they physically received the goods and used them in manufacturing, thus credit denial was unjustified. They argued no investigation was done with the transporter or manufacturer/supplier. M/s S.K. Garg & Sons filed ST-3 returns accepted by the department, supporting their claim. The Department argued that M/s S.K. Garg & Sons was non-existent and engaged in issuing fake invoices for cenvat credit, thus credit denial was warranted.

The Tribunal noted the lack of investigation at the manufacturer/supplier or transporter's end to verify goods supply. M/s S.K. Garg & Sons was a registered dealer, filing returns accepted by the department. Relying on a precedent case, the Tribunal emphasized the need for corroborative evidence before denying credit based on presumptions. The Tribunal upheld the appeal, citing the absence of investigation at crucial points and the reliance on unsubstantiated allegations. The impugned orders were set aside, and appeals allowed with consequential relief, if any.

This judgment highlights the importance of thorough investigations and corroborative evidence in cases of cenvat credit denial based on dealer non-existence. The decision underscores the need for tangible proof before alleging non-receipt of goods and denying credit, emphasizing the principle of substantiated claims over mere presumptions in tax matters.