2017 (10) TMI 279 - AT - Central Excise

CENVAT credit - duty paying invoices - Bogus invoices - it was alleged that the appellants have not received the inputs and the evidence for that is in the shape of vehicle numbers of which the goods have been claimed to have been received - Held that - On perusal of the list of vehicles shown in Annexure-A to the SCN clearly shows that some of the vehicles are incapable of carrying such scraps. There are vehicles in the nature of two wheelers like, motor cycles, luna TFR or scooty. There are also tankers in which such scraps cannot be carried - Rule 9 (5) of the Cenvat Credit Rules puts the onus of establishing that the goods are received in the factory of the person taken credit - In these circumstances, when the revenue has clearly shown that the vehicles in which the goods are alleged to have been transported are incapable of carrying such material then the Revenue has discharged its liability and onus is on the person taking credit. The impugned orders wrongly puts onus of establishing non-receipt of inputs on the Revenue - the impugned order has failed to examine the said issue properly - matter is remanded to the Commissioner (Appeals) to decide the issue afresh.

Summary

Issues:
- Appeal against dropping of demand for Cenvat Credit taken on the strength of bogus invoices.
- Whether the appellants can be faulted for supplier's failure to deposit duty with Revenue.
- Denial of credit on invoices without duty debited and goods not physically received.
- Onus of establishing receipt of goods on the appellants.
- Separate proceedings against supplier and appellant, and the relevance of evidence in each case.

Analysis:
- The appeal was filed by the Revenue against the dropping of demand for Cenvat Credit taken by the respondents on the basis of bogus invoices issued by a supplier, without physically receiving the goods in their factory. The original adjudicating authority confirmed the demand, but the Commissioner (Appeals) dropped it, holding that the appellants cannot be faulted if the supplier collected duty but failed to deposit it. The penalty was upheld on the supplier, not the appellants.

- The Revenue argued that credit was denied on invoices without duty debited by the supplier and goods not received by the appellants. The onus of proving receipt of goods was on the appellants as per Rule 9 (5) of the Cenvat Credit Rules. The Revenue presented evidence, including a report showing the goods were never received, and vehicles listed in invoices were incapable of carrying such materials. The Commissioner allegedly accepted the appellants' claim without evidence, and the penalty should have been imposed on the director of the appellant company.

- The respondent's counsel highlighted that a show-cause notice was issued to the supplier, and the order confirmed that the appellant availed credit after receiving goods. No penalties were imposed on the appellants in the notice. The counsel argued that the Revenue accepted the order regarding the supplier, so a different view cannot be taken in the appellant's case.

- The judge noted that the evidence and proceedings against the supplier and appellant were separate. The investigation against the supplier did not include details about the vehicles used for transport, unlike the appellant's case. The judge emphasized that conclusions from one proceeding cannot be applied to another when the evidence and circumstances are different. The judge found discrepancies in the list of vehicles provided, suggesting the goods might not have been received in the factory. The onus of proving receipt lies with the person claiming credit, and the Revenue had discharged its liability. The order was set aside, and the matter was remanded for a fresh decision by the Commissioner (Appeals).