2016 (8) TMI 1104 - AT - Central Excise

Cenvat credit - fraudulently availed on the dealers invoices without receipt of the inputs covered therein - appellant submitted that the goods were purchased received and used in the appellant s factory as per the various records maintained by them and the goods covered by the invoices were received by the appellants - Held that - that the department s whole case is based on transporter s statement and statement of loading clerk who stated that the goods were not transported to Pune but to Nagpur. I find that mere statement is not sufficient to establish charge of fraudulent cenvat credit. Whether the goods were physically received or otherwise by the appellants is a positive act which must be proved with tangible evidence beyond any doubtand not with circumstantial evidences. In the present case charge of non receipt of goods was made against the appellant. The director in his statement categorically stated that they have received the goods covered under the sale invoices of dealers the entries of such receipts were made in the stock account i.e. Form IV register and also in the accounts purchase ledger the payments of the said purchases were made through cheques. This statement of the director could not be negated by the department. The charge of non-receipt of goods is only on the statements of transporter and loading clerk of the weigh bridge. The said statements can only be relied upon only if the same is corroborated by independent and cogent evidence which department failed to adduce. Moreover when this sole evidence was relied upon which is contradictory to the statement given by the director of the appellants. In such case the department must have allowed the cross examination of the transporter which department failed to do. Therefore statements of third person without cross examination and without support of corroborative evidence can not be used against the appellants. Hence the order passed by the adjudicating authority is legal and proper and the impugned order is unsustainable. - Decided in favour of appellant

Summary

Issues: Alleged fraudulent availing of Cenvat Credit based on transporter and loading clerk statements.

Analysis:
1. Background: The appeal challenged an Order-in-Appeal passed by the Commissioner (Appeals) Central Excise, Pune-III, regarding the alleged fraudulent availing of Cenvat Credit by the appellants based on input invoices issued by two dealers located at Nagpur.

2. Appellant's Submission: The appellant contended that they purchased goods from Nagpur dealers, recorded the purchases in their books, made payments through cheques, and used the goods in their factory, as evidenced by various records. They argued that the statements of the transporter and loading clerk lacked documentary evidence and were contradicted by their own records, leading the adjudicating authority to drop the proceedings. They requested cross-examination of dealers and transporters, which was denied.

3. Revenue's Argument: The Revenue maintained that the statements of the transporter and loading clerk indicated that goods meant for the appellants were unloaded at Nagpur, not Pune, suggesting fraudulent Cenvat Credit availing. They cited several judgments to support their position.

4. Judgment: The Member (Judicial) analyzed the evidence and found that the department's case relied heavily on the transporter's and loading clerk's statements. However, the director of the appellant affirmed receiving the goods, which was supported by records and payments. The judgment emphasized the need for tangible evidence to prove non-receipt of goods beyond doubt. It highlighted the lack of corroboration for the statements and the absence of cross-examination, rendering them insufficient to establish fraudulent availing of Cenvat Credit. The judgment distinguished the case from the cited judgments and concluded that the impugned order was unsustainable, setting it aside and allowing the appeal.