2017 (6) TMI 973 - AT - Central Excise

CENVAT credit - duty paying invoices - godown address given by him at the time of registration as a dealer was subsequently vacated and the said dealer was not actually dealing in the goods in question as such, the Revenue entertained a view that such dealer was issuing only invoices without the corresponding supply of goods - whether the appellant is entitled to avail the credit on the basis of invoices issued by Sidh Balak Enterprises, who according to the Revenue was not actually supplying the goods? - Held that - in terms of provisions of Rule 7 of CCR, the assessee is required to ensure the genuineness of the supplier of the inputs by taking reasonable steps. Explanations attached to the said Rule is to the effect that manufacturer shall be deemed to have taken the reasonable steps, if he can satisfy himself about the identity and address supplied on certificate issued by the Superintendent of Central Excise. When a dealer is registered with the department and is issued cenvat credit invoices, duly incorporating the excise registration number. It has to be held that manufacturer has duly complied with the requirement of verifying the identify and address of the supplier - Subsequent investigations relied upon by the Revenue revealed that godown address were subsequently changed by M/s Sidh Balak Enterprises. This shows that during the relevant period it was rightly registered at the address given at the time of registration. It is not also disputed that the invoices were actually issued by M/s Sidh Balak Enterprises, on the basis of which the appellants have availed the credit and the same were being duly reflected by them in their RG 23A Part I and credit was reflected in their RG 23A Part II registration. Such registers were being annexed by them in the quarterly return filed with the department and no objection was ever taken by the department. Reliance was placed in the case of Shakti Steel Rolling Mills 2014 (2) TMI 452 - CESTAT NEW DELHI . CENVAT credit cannot be denied to the appellant and admittedly the appellant have followed the procedure of under Rule 7 of the CCR 2004, while procuring the input - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over cenvat credit availed based on invoices issued by a registered dealer; Allegations of dealer issuing only invoices without actual supply of goods; Proceedings initiated against the appellant for disallowing cenvat credit; Challenge on merits and limitation; Requirement of verifying supplier's genuineness under Rule 7 of Cenvat Credit rules; Compliance with identity and address verification; Investigations revealing changed godown address of dealer; Appellant reflecting credit in registers and quarterly returns; Precedents supporting denial of cenvat credit based on genuine invoices; Revenue's failure to conduct complete investigation; Lack of evidence to show procurement from alternative sources; Transporter inquiries not made during relevant period; Reliance on statements and evidence provided by the Revenue.

Analysis:

The judgment by the Appellate Tribunal CESTAT CHANDIGARH addresses a dispute concerning the appellant's availed cenvat credit based on invoices from a registered dealer, M/s Sidh Balak Enterprises. The Revenue alleged that the dealer issued invoices without actual supply of goods, leading to proceedings against the appellant. The appellant contested the show cause notice, arguing compliance with Rule 7 of Cenvat Credit rules requiring verification of supplier genuineness. Investigations revealed a changed godown address of the dealer, but the appellant had reflected the credit in registers and returns without objection from the department.

The Tribunal considered precedents, including Shakti Steel Rolling Mills, supporting the appellant's position if based on genuine invoices. It highlighted the Revenue's failure to conduct thorough investigations, lack of evidence on alternative procurement sources, and the absence of transporter inquiries during the relevant period. The judgment emphasized the importance of proper verification and documentation in availing cenvat credit, as well as the significance of following established legal principles and precedents.

Ultimately, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant based on the established legal principles, the appellant's compliance with Rule 7, and the lack of substantial evidence provided by the Revenue to refute the appellant's claims. The judgment underscored the necessity for comprehensive investigations and adherence to legal requirements in matters related to cenvat credit availment, emphasizing the burden of proof on the Revenue to substantiate its allegations.