2017 (9) TMI 1314 - AT - Central Excise

CENVAT credit - duty paying invoices - denial of credit on the ground of wrong mention of the vehicle nos. in the invoices issued by the registered dealers - Held that - Admittedly, the appellant has manufactured their final product which stands entered in their RG-I records and cleared under Central Excise invoices on payment of duty. If the appellant has not received the raw material, the manufacture of final product is impossible. Further, the Revenue has not produced any corroborative evidence to show that if the raw material has not been received from the said two registered dealers what is the alternative source of such receipt of raw materials. Neither of the representatives of the appellants have deposed that the inputs were not actually transported from dealers to the manufacturing Unit. Tribunal in the case of Jyoti Industries Vs Commissioner of Central Excise & Service Tax Ludhiana 2015 (4) TMI 1158 - CESTAT NEW DELHI has held that the Cenvat credit cannot be denied on statement of suppliers and allegations that vehicle nos. mentioned in the invoices cannot transport the goods, in the absence of any other corroborative evidences produced by the Revenue indicating as to from where inputs used were procured. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit based on incorrect invoices mentioning vehicle numbers not matching the actual vehicles transporting raw materials.

Analysis:

1. The appellants were involved in manufacturing MS Ingots, Angles, Panels, and Flats under Chapter 72 of the Central Excise Tariff Act, 1985, availing Cenvat credit based on invoices from registered dealers M/s. Ruchika Global Interlinks (P) Ltd. and M/s. Bajrang Bali Trading Company.

2. Investigations revealed discrepancies in vehicle numbers on invoices, prompting proceedings against the appellants for denying Cenvat credit and imposing penalties. Statements from the dealers clarified the use of actual vehicles for transporting goods, with proper accounting and payment methods.

3. The original adjudicating authority confirmed the demand, interest, and penalties, which were upheld by the Commissioner Appeals, leading to the present appeals challenging the denial of credit.

4. The advocate for the appellants argued that the only reason for denial was the incorrect vehicle numbers on invoices, emphasizing the lack of incriminating statements indicating non-receipt of inputs, citing Tribunal precedents.

5. The departmental representatives supported the lower authorities' findings and sought rejection of the appeal.

6. The Tribunal noted that the denial of credit was solely based on incorrect vehicle numbers on invoices, with the advocate explaining possible errors due to direct dispatch of raw materials to the factory. The absence of evidence showing non-receipt of raw materials from the dealers was highlighted.

7. Referring to Tribunal and court decisions, including Jyoti Industries and Manoranjan Singh Duggal cases, it was established that denial of credit without corroborative evidence or questioning document authenticity is unjustified. The lack of alternative sources for raw material procurement was emphasized.

8. Given the consistent rulings in similar cases, the Tribunal overturned the impugned order, allowing the appeals and providing consequential relief to the appellants based on the established legal principles and lack of substantial evidence supporting the denial of Cenvat credit.

This comprehensive analysis of the judgment addresses the issues involved, the arguments presented by both sides, and the legal reasoning behind the Tribunal's decision to set aside the denial of Cenvat credit.