2017 (11) TMI 826 - AT - Central Excise

CENVAT credit - fake invoices - Held that - There is no dispute about the fact that the payments for the inputs were made by the appellant by way of cheques. It is also not the Revenue s case that the consideration, which flows to M/s. M.K.Industries, stands received back by the appellant subsequently. As rightly observed by the Commissioner(Appeals), there is also no evidence indicating any alternative source of procurement of inputs in question. Admittedly the appellant s final product cannot be manufactured out of vacuum and requires inputs. If according to Revenue inputs were not received by the appellant, I really fail to understand as to how the appellant had manufactured their final product, which stand cleared on payment of duty. The Tribunal came to a finding that the assessee in fact had received the goods covered under the disputed invoices in as much as Revenue has not brought any tangible evidence to prove non-receipt of the goods by the respondent. The invoices issued by M/s.M.K.Steels, on the basis of which they have availed the credit were not valid documents for availing the credit. As such it seems that the said order was passed in the light of concession made by the appellant and has no relevance in the present case. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of Cenvat credit based on alleged fake invoices issued by the supplier.

Analysis:
The case involved the denial of Cenvat credit to the appellant based on investigations revealing fake invoices issued by the supplier, M/s.M.K.Steels. The Revenue contended that the appellant had availed credit on the basis of these fake invoices. The original adjudicating authority confirmed the demand and imposed penalties, but the Commissioner(Appeals) set aside the order, leading to the present appeals by the Revenue.

Upon thorough examination, the appellate tribunal found that the Revenue's case heavily relied on the statement of Shri S.K.Gupta from M/s.M.K.Industries, who was not cross-examined. The tribunal held that without cross-examination, the statement could not be considered as evidence. Additionally, the appellant had taken reasonable steps as per rule 9(3) of the CENVAT Credit Rules, 2004, by identifying the supplier and making payments through cheques, which were not rebutted by the Revenue.

The Commissioner(Appeals) also noted that the appellant had reflected the inputs and credit in their records, which were scrutinized by the Revenue without any discrepancies detected. The tribunal emphasized that the Revenue failed to establish any alternative source of procurement for the inputs and did not investigate whether the goods were actually purchased by the appellant. The tribunal referred to various precedent decisions supporting the appellant's entitlement to credit under similar circumstances.

Furthermore, the tribunal cited cases where courts and tribunals upheld the right of manufacturers to claim credit based on invoices from registered dealers, even in cases of alleged fraudulent activities. The tribunal highlighted that the Revenue's lack of concrete evidence to prove non-receipt of goods by the appellant was crucial in determining the denial of credit.

In conclusion, the tribunal found no fault in the Commissioner(Appeals) order and rejected the appeals filed by the Revenue, along with disposing of cross-objections. The judgment emphasized the importance of concrete evidence and adherence to legal provisions in determining the denial of Cenvat credit based on alleged fake invoices.