2008 (12) TMI 158 - AT - Central Excise

Cenvat Credit Bogus Invoices Non receipt of Inputs the vehicle numbers mentioned on the invoices were either found to be two wheelers or three wheelers etc. i.e. of the vehicles not capable of transporting such quantity of steel products or of trucks, whose owners denied to have transported any goods for - at the time of the officer s visit to premises while the RG-23 Register was showing some stock, on physical verification, no stock was found in their approved godown - No GRs or bilties were produced - All these circumstances indicate that these were only the paper transactions not involving any actual sale of the goods Held that credit is not allowed.

Summary

Issues:
Department's appeals against Order-in-Appeal allowing Cenvat credit on the basis of alleged bogus invoices without actual receipt of goods.

Analysis:
The case involved the Department's appeals against the Order-in-Appeal allowing Cenvat credit to the Respondents based on alleged bogus invoices without actual receipt of goods. The Respondents, rolling mills manufacturing Iron and Steel products, availed Cenvat credit based on invoices from M/s. H.B.R. Steel Corporation. The Department alleged that no goods were sold by H.B.R. to the Respondents, as evidenced by discrepancies such as vehicle numbers on invoices being of two or three-wheelers, denial of transporting goods by truck owners, and lack of physical stock at H.B.R.'s premises despite register entries. The Deputy Commissioner confirmed the Cenvat credit demands and imposed penalties, but the Commissioner (Appeals) set aside these orders. The Department appealed this decision, leading to the current proceedings.

In the hearing, the Departmental Representative argued that the burden of proving receipt of goods lies with the Respondents, citing a Tribunal judgment. The absence of concrete evidence from the Respondents was highlighted. On the other hand, the Respondents' Counsel contended that no inquiries were made with the receiving parties and referenced a Tribunal judgment dropping penalties on the dealer, H.B.R. Steel Corporation. The Counsel emphasized that payments were made through cheques/drafts and no input shortages were found at the Respondents' premises.

Upon considering both sides, the Member (T) found the facts consistent across all appeals. It was established that the Respondents claimed to have received goods from H.B.R., while the Department contended otherwise based on various discrepancies. The lack of supporting documentation, such as GRs or bilties, and failure to name transporters raised suspicions of paper transactions without actual goods exchange. Referring to a Tribunal judgment, the burden of proof regarding goods receipt was deemed to rest with the manufacturer taking Cenvat credit, which the Respondents failed to substantiate beyond payment evidence. The Member noted that the Tribunal's previous order on H.B.R. Steel Corporation was not binding due to timing, leading to the setting aside of the Order-in-Appeal and allowing the Department's appeals.

In conclusion, the Tribunal found in favor of the Department, emphasizing the lack of evidence supporting the actual receipt of goods by the Respondents, thereby overturning the Order-in-Appeal and allowing the Department's appeals.