2016 (10) TMI 300 - AT - Central Excise

Denial of CENVAT credit - demand of duty alongwith interest and penalty - manufacturer of copper wire/rods/circles - investigation at the end of First Stage Dealer and at the end of appellant - supply of goods and issue of cenvatable invoices to avail inadmissible credit - Held that - the appellant has been able to prove on the basis of evidence such as octroi receipt of the transporter, sales tax check post etc. to prove the goods accompanied with invoices have been received by them in the factory and the payment has been made through account payee cheque and no flow back of money has been taken place. Moreover the goods have been used for manufacture of final products cleared on payment of duty. The Revenue has not come up with any contrary evidence to controvert the evidence produced by the appellant. The decision in the case of COMMISSIONER OF CENTRAL EXCISE Versus GARIMA ENTERPRISES 2009 (1) TMI 230 - PUNJAB & HARYANA HIGH COURT relied upon and held that the credit cannot be denied to the appellant on the basis of evidence produced by them - denial of CENVAT credit not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of credit to the main appellant M/s. Agarwal Metal Works Pvt. Ltd., duty demand, interest, and penalty imposition based on invoices issued by M/s. R.K. Enterprises.

Analysis:

The main issue in this case revolves around the denial of credit to the main appellant, M/s. Agarwal Metal Works Pvt. Ltd., and the subsequent duty demand, interest, and penalty imposition based on invoices issued by M/s. R.K. Enterprises. The investigation conducted revealed discrepancies where the first stage dealer, M/s. R.K. Enterprises, claimed to have issued cenvatable invoices without supplying the goods. However, the main appellant was able to produce evidence such as octroi receipt of the transporter, sales tax check post documents, and proof of payment through account payee cheques to demonstrate that they had indeed received the goods for the manufacture of their final products cleared on payment of duty.

The appellant's counsel argued that the denial of credit solely based on the statement of a third party, i.e., M/s. R.K. Enterprises, was unjustified. They cited relevant precedents such as the cases of P.P. Oxide-2016, Garima Enterprises-2009, and P.P. Oxide-2015 to support their contention that credit cannot be denied merely on the basis of a statement without concrete evidence to the contrary. The appellant successfully refuted the allegations by providing substantial evidence to prove the receipt of goods and lawful payment for the same.

The Tribunal, after considering the submissions and examining the evidence presented, found that the main allegation for credit denial was primarily based on the statement of R.K. Gupta from M/s. R.K. Enterprises. However, the appellant's evidence, including documentation of goods received, payment records, and lack of contradictory evidence from the Revenue, led the Tribunal to set aside the denial of credit. Relying on past decisions and the jurisdictional High Court of Punjab & Haryana, the Tribunal concluded that the denial of credit and subsequent duty demand were unjustified. As a result, the impugned orders were set aside, and the appeals were allowed with consequential relief, if any, thereby absolving the appellants from penalties.