2017 (3) TMI 1404 - AT - Central Excise

CENVAT credit - forged invoices - the dimension of the materials shown in the delivery challans issued by M/s. Sheetal Steels to the registered dealer did not match with the dimensions specified in the CENVAT invoices issued by the registered dealer to the respondent - Held that - irregular/offence/lapses if any is on the dealer. However no proceedings have been initiated against the dealer. The respondent has availed credit on the invoices issued by the dealer. The Department has no case that they have not used the materials supplied on the invoices in the production of final products. So also there is no case that respondents did not pay duty on the inputs - if passing on the credit by the dealer was irregular, it is the dealer who has to be proceeded against and not the respondent since the respondent has availed credit on the invoices which have been issued by the dealer - appeal dismissed - decided against Revenue.

Summary

Issues:
Fraudulent availment of CENVAT credit based on mismatched descriptions in invoices and delivery challans.

Analysis:
The Department filed an appeal against the Commissioner(Appeals) order setting aside the demand, interest, and penalty imposed due to alleged fraudulent availment of CENVAT credit. The Department alleged that the respondents availed credit based on invoices from a registered dealer that did not match the materials actually received. The Department argued that the materials procured by the dealer and supplied to the respondent were different from what was mentioned in the invoices. The original authority disallowed the irregularly availed credit and imposed penalties, which the Commissioner(Appeals) set aside. The Department contended that the respondent availed credit on materials not actually received by them. The respondent, on the other hand, argued that they received the inputs as per purchase orders, and the goods matched the descriptions in the invoices. The respondent claimed they were not responsible for any actions of the dealer and that all necessary details were provided in the invoices for availing credit.

The crux of the allegation was that the dimensions of materials in delivery challans did not match the descriptions in CENVAT invoices. The Commissioner(Appeals) found in favor of the respondent, stating that the demand was not sustainable. The Commissioner concluded that the respondent received inputs as per purchase orders, and any variation in descriptions was due to simple processes like cutting, not amounting to manufacture. It was observed that the dealer, not the respondent, may have committed any offense regarding the materials supplied. The Commissioner agreed that passing on credit by the dealer might have been irregular, but the respondent, who availed credit on dealer's invoices, should not be penalized. No proceedings were initiated against the dealer for any irregularities. The Commissioner held that if there was any offense, it was on the dealer, and the respondent should not be denied CENVAT credit for using materials in production and paying due duties.

In conclusion, the Tribunal upheld the Commissioner(Appeals) decision, stating that the irregularities, if any, were on the dealer's end, and the respondent should not be penalized for availing credit based on dealer's invoices. The appeal was dismissed, and the impugned order did not warrant interference.