2016 (12) TMI 216 - AT - Central Excise

CENVAT credit - clandestine removal to avail fraudulent credit - bogus invoices - fictitious firm - Held that - The evidences placed by department before me are not cogent to establish that appellant is guilty of fraudulent availment of CENVAT Credit. Mere suspicion or assumptions and presumptions cannot be the basis for such serious allegation of fraudulent availment of credit. From the facts and evidences placed before me, I am of the view that department has not succeeded in establishing the allegations raised in the SCN against the appellant. In view thereof, the impugned demand alleging fraudulent availment of credit is not sustainable - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Irregular credit availed under CENVAT Credit Rules, 2004 based on fake invoices.
- Allegations of fraudulent credit availed without physical receipt of goods.
- Confirmation of demand, interest, and penalty imposed on the firm.
- Discrepancies regarding specific invoices dated 24.08.2009 and 06.10.2009.
- Lack of evidence to establish fraudulent availment of CENVAT Credit.

Analysis:

Issue 1: Irregular credit availed under CENVAT Credit Rules
- The Appellant firm availed input credit under CENVAT Credit Rules, 2004 based on invoices from dealers Aerochem and Aerochem Impex.
- Investigations by DGCEI revealed collusion between Aerochem Impex and YM Drugs to generate fake invoices without goods movement, leading to irregular credit availed by the Appellant.

Issue 2: Allegations of fraudulent credit without physical receipt of goods
- Show Cause Notice demanded recovery of irregular credit with interest and penalty, leading to confirmation of demand by the Commissioner (Appeals).
- Appellant argued that allegations were based on the lack of material receipt against specific invoices, emphasizing proper accounting and utilization of received goods.

Issue 3: Confirmation of demand, interest, and penalty
- After due process, the Commissioner (Appeals) upheld the demand, interest, and penalty imposed on the Appellant.
- Appellant appealed to the Tribunal challenging the confirmation of demand, interest, and penalty.

Issue 4: Discrepancies regarding specific invoices
- Department disputed the receipt of goods against invoices dated 24.08.2009 and 06.10.2009, alleging fraudulent credit availed by the Appellant.
- Appellant provided documentary evidence of goods receipt, return due to defects, and proper accounting, refuting the allegations.

Issue 5: Lack of evidence to establish fraudulent availment of CENVAT Credit
- Department presented findings from investigations against YM Drugs and Mehta & Company, emphasizing fake invoices and lack of material supply.
- Tribunal found the evidence presented insufficient to prove fraudulent credit availment, highlighting the absence of cogent evidence and reliance on assumptions.

Conclusion:
- Tribunal set aside the impugned order, allowing the appeal and providing consequential reliefs.
- Lack of substantial evidence led to the dismissal of allegations of fraudulent credit availment by the Appellant.
- The decision emphasized the importance of concrete proof in establishing serious allegations of irregular credit under CENVAT rules.