2016 (11) TMI 1330 - AT - Central Excise

Denial of CENVAT credit - dealer found non-existent - Held that - 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 which is vital evidence to reveal the truth. Further, M/s S.K. Garg & Sons was registered dealer during the impugned period and all the ER-1 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 appellant have not received the goods, it cannot be alleged against the appellant that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer. In the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the appellant - appeal allowed - decided in favor of appellant-assessee.

Summary

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

Analysis:
The appellant procured goods from M/s S.K. Garg & Sons, a first stage dealer, who was found non-existent during an investigation. The appellant availed cenvat credit on goods purchased from M/s S.K. Garg & Sons, leading to a show cause notice denying cenvat credit. The matter was adjudicated, and cenvat credit was denied, with duty, interest, and penalty imposed. The appellant contended they physically received the goods and used them in manufacturing final goods, arguing against the denial of cenvat credit.

Analysis Continues:
The appellant's counsel argued that no inculpatory statement existed, and no investigation was conducted with the transporter or manufacturer/supplier of the goods. They also highlighted that M/s S.K. Garg & Sons filed ER-1 returns accepted by the department, supporting their claim. The Department's Representative opposed, citing the non-existence of M/s S.K. Garg & Sons and the lack of storage capacity, justifying the denial of cenvat credit.

Analysis Continues:
The Tribunal observed the absence of investigations at the end of the manufacturer/supplier or transporter to ascertain the truth. The registration and filing of returns by M/s S.K. Garg & Sons were noted, emphasizing the lack of evidence to prove the appellant did not receive the goods. Precedent cases were referenced where similar issues were addressed, leading to the conclusion that without proper investigation, cenvat credit cannot be denied.

Analysis Concludes:
Based on the observations, the impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized the necessity of corroborative evidence and proper investigation before denying cenvat credit, highlighting the importance of substantiated allegations over presumptions.