2017 (11) TMI 1516 - AT - Central Excise

CENVAT credit - duty paying documents - receipt of invoices without actual receipt of goods - Held that - There is no other evidence that has been adduced by the department to substantiate that Finecab had not received the inputs shown under 71 invoices of the suppliers. The assertion by Finecab that at the suppliers end, excise duty had been discharged in respect of the goods covered in the invoices and that they themselves had made payments to the suppliers against those invoices by way of cheques, CR notes, Bank transfers etc., have also not been disproved or controverted by the department. Having drawn nothing from the separate investigations on Finecab including search of the factory premises, search of office premises, recovery of hard disk of main server and its analysis, recording statements of co-persons etc., the department has then resorted to draw in probable conclusions from an earlier DRI investigation into importers of copper rods and initiated these proceedings. Obviously then, except for a riding piggyback on the said DRI investigations, there is no precision or proof even to a prudent degree to back up the allegations against Finecab made by the department, surely, suspicion or presumption cannot take the place of proof. Reliance placed in the case of M/s Motabhai Iron & Steel Industries and others Versus CCE Ahmedabad-II 2014 (2) TMI 63 - CESTAT AHMEDABAD , where it was held that in absence of any perversity in the findings recorded by the Tribunal, the impugned order does not give rise to any question of law, much less, a substantial question of law so as to warrant interference. The impugned order confirming the allegations as made out in the show cause notice, fails the test of legal scrutiny. - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Alleged irregular availing of Cenvat credit by Finecab.
2. Legitimacy of invoices and receipt of goods.
3. Evidence supporting the department's allegations.
4. Validity of the adjudicating authority's conclusions.

Detailed Analysis:

1. Alleged Irregular Availing of Cenvat Credit by Finecab:
The primary issue revolves around the allegation that Finecab availed Cenvat credit totaling ?1,86,38,408/- on the strength of invoices without actual receipt of copper wire in their factory. The department argued that these transactions were based on fabricated documents.

2. Legitimacy of Invoices and Receipt of Goods:
Finecab contended that they availed Cenvat credit on duty-paid copper wire purchased from three suppliers: M/s Sree Kumar Utensils Pvt. Ltd, M/s Sree Enterprises, and M/s Gimpex. They emphasized that the invoices were in the prescribed format with all necessary details, and payments were made through banking channels. The department did not dispute the payment of appropriate duty on these goods. Finecab also argued that no discrepancies were found during the surprise visit by the department officers, and no adverse data was found during the forensic analysis of their hard disk.

3. Evidence Supporting the Department's Allegations:
The department's case was primarily based on the DRI's investigations, which suggested that the suppliers issued invoices without manufacturing the copper wire. However, the department failed to produce concrete evidence to support these allegations. The adjudicating authority's reliance on the DRI's findings was deemed insufficient as there was no corroborative evidence to prove that Finecab did not receive the copper wire.

4. Validity of the Adjudicating Authority's Conclusions:
The adjudicating authority's conclusions were challenged on the grounds that they were based on presumptions rather than concrete evidence. The tribunal found that the department did not establish even a preponderance of probability to back up the allegations. The tribunal also referred to the case of Motabhai Iron & Steel Industries, where it was held that credit cannot be disallowed based on statements not corroborated by other evidence.

Conclusion:
The tribunal concluded that the impugned order confirming the allegations against Finecab failed the test of legal scrutiny. The department's case was primarily based on presumptions and lacked concrete evidence. Consequently, the appeals by Finecab and its Managing Director were allowed, and the impugned order was set aside, granting consequential benefits as per law.