2016 (11) TMI 627 - AT - Central Excise

Denial of CENVAT credit - dealer not existing - 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 - appeal allowed - decided in favor of appellant-assessee.

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 appellant.

Analysis:
The appellant appealed against the denial of cenvat credit on inputs based on the premise that the dealer M/s S.K. Garg & Sons, from whom goods were procured, was non-existent. Investigations revealed that M/s S.K. Garg & Sons had vacated its premises in 2003, leading to the cancellation of its registration in 2008. The appellant was accused of receiving invoices but not the goods, prompting a show cause notice to deny cenvat credit, demand duty, interest, and impose penalties. The matter was adjudicated, cenvat credit was denied, and penalties were imposed, leading to the appellant's appeal.

The appellant's counsel argued that the appellant physically received the goods, used them in manufacturing, and that no investigations were conducted with the transporter or the manufacturer/supplier of the goods. They also highlighted that M/s S.K. Garg & Sons filed ER-I returns accepted by the department, supporting their claim. Reference was made to the decision of CCE, Ludhiana Vs. Dhawan Steel Industries to strengthen their case.

On the other hand, the Departmental Representative contended that investigations revealed M/s S.K. Garg & Sons' non-existence and their involvement in issuing fake cenvatable invoices. The lack of storage facilities with M/s S.K. Garg & Sons was emphasized to justify the denial of cenvat credit.

Upon hearing both parties, the tribunal noted the absence of investigations at the end of the manufacturer/supplier or transporter to verify the supply of goods. The registration of M/s S.K. Garg & Sons during the disputed period and the acceptance of ER-I returns were considered as supporting factors. Citing previous tribunal decisions, including the case of M/s Dhawan Steel Industries, it was concluded that allegations cannot be solely based on presumptions and assumptions without corroborative evidence. The tribunal referred to similar cases and set aside the impugned orders, allowing the appeal with consequential relief.

In conclusion, the tribunal's decision was based on the lack of concrete evidence regarding the non-receipt of goods by the appellant, emphasizing the importance of thorough investigations and corroborative evidence in such cases. The judgment highlighted the need for substantiated claims rather than presumptions to deny cenvat credit, ultimately ruling in favor of the appellant based on legal precedents and factual considerations.