2016 (12) TMI 326 - AT - Central Excise

Demand - clandestine removal - inputs and finished goods in the statutory records were found in the order - Held that - the main allegation for denial of credit to the respondent is the statement of She R.K Gupta, proprietor of M/s R.K. Enterprises who has stated that he has not supplied the goods and issued the cenvatable invoices to avail inadmissible cenvat credit but the respondent have proved on the basis of evidence that they have received the goods and the records were found in their premises in order. Further, no corroborative evidence produced by the Revenue for non receipt of the inputs in the factory of the respondent. Moreover, the respondents have received the goods through second stage dealer accompany the goods and invoices. The Revenue has also failed to prove flow back of money for none receipt of the goods. This is the fact on record the goods have been used in manufacture of final product which have been cleared on payment of duty. In the absence of any contrary evidence, the cenvat credit cannot be denied to the respondents relying on the decisions in the case of Garima Enterprises 2009 (1) TMI 230 - PUNJAB & HARYANA HIGH COURT . The respondents have taken cenvat credit correctly and no proceedings were warranted against the respondents. Consequently, no penalty is imposable on the respondents - appeal dismissed - decided in favor of respondent-assessee.

Summary

Issues:
Appeal against dropped demand and penalty imposition.

Analysis:
The case involved multiple appeals concerning dropped demand and penalty imposition against various parties. The impugned order dropped the demand against two companies and set aside the penalty imposed on another. The appeals were taken up together due to common issues. The investigation revealed discrepancies in receiving goods against cenvatable invoices issued by a first-stage dealer. The duty was demanded, along with penalties, based on this discrepancy. The Commissioner (A) set aside the orders of adjudication, leading to the Revenue's appeal.

The Revenue argued that since the first-stage dealer denied supplying goods and admitted issuing cenvatable invoices, the impugned orders should be set aside. However, the appellant's counsel contended that the goods were received through a second-stage dealer who issued proper cenvatable invoices. The Commissioner (A) found evidence that the goods were received, transported to the premises, and used in manufacturing final products cleared after paying duty. The Commissioner held that cenvat credit cannot be denied solely based on a third party's statement.

Upon reviewing the case papers and evidence, it was found that the first-stage dealer's statement was contradicted by the appellant's evidence showing receipt of goods and proper records. The Revenue failed to provide corroborative evidence for non-receipt of inputs at the appellant's factory. The goods were received through a second-stage dealer with accompanying goods and invoices. The absence of evidence on money flow back for non-receipt of goods supported the appellant's case. Relying on legal precedents, it was concluded that the appellant correctly availed cenvat credit, and no penalty was warranted.

The judgment upheld the impugned orders, dismissing the Revenue's appeals. The decision was based on the lack of evidence supporting the Revenue's claims and the appellant's ability to prove the receipt and use of goods for manufacturing final products cleared after paying duty.