2017 (12) TMI 705 - AT - Central Excise

CENVAT credit - fake invoices - receipt of invoices without receipt of goods - the case of the Revenue is that, as the supplier M/s VS who has supplied the goods to the respondent has not received its raw material from the supplier of inputs and it was alleged that M/s VS is not manufactured the goods. Therefore, the invoices issued by M/s VS appears to be fake invoices - Held that - I have gone through the statement relied on in the show cause notice of the respondent, namely, Shri Bhaiju Thyagarajan, the said statement is not inculpatory, the same cannot be corroborative evidence - no investigation was conducted at the end of the transporters when the vehicle number was entered in the invoices, name of driver etc. whether those vehicles have transported goods, from Jammu Commissionerate to the respondent unit. I do agree with the observations made by the Ld. Commissioner (A) in the impugned order that the short allegation of the Revenue is that the invoices against which the respondent have been availed Cenvat credit appears to be fake. In that circumstances, revenue has failed to prove that respondents have taken Cenvat credit on the strength of fake invoices but, it is only a presumption by the Revenue that the respondent has availed Cenvat credit on the invoices which appears to be fake invoice - in this case the Revenue s allegation is on presumption and assumption basis, therefore it cannot be said the Revenue has made out a case against the respondent with admissible corroborative evidences. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Admissibility of Cenvat credit to the respondent.
2. Validity of the invoices issued by M/s VS.
3. Adequacy of the investigation conducted by the Revenue.
4. Presumption and assumption as the basis of the Revenue’s case.
5. Onus of proof regarding the receipt of goods.

Issue-wise Detailed Analysis:

1. Admissibility of Cenvat Credit to the Respondent:
The primary issue revolved around whether the respondents were entitled to avail Cenvat credit on the raw materials procured from M/s VS Industries. The Revenue argued that the credit was inadmissible as the invoices issued by M/s VS were allegedly fake, and no actual goods were received. The respondents contended that they had received the goods and availed Cenvat credit based on valid invoices.

2. Validity of the Invoices Issued by M/s VS:
The Revenue's investigation revealed that M/s VS had not received raw materials from their suppliers and had manipulated documents to show the procurement and manufacture of goods. This led to the conclusion that the invoices issued by M/s VS were fake. However, the respondents argued that the invoices were genuine and supported by transport documents, goods receipt notes, and purchase registers.

3. Adequacy of the Investigation Conducted by the Revenue:
The respondents highlighted that the Revenue's investigation was inadequate as it did not extend to verifying the actual transportation of goods from M/s VS to the respondents. No investigation was conducted at the transporter's end or at check posts to confirm the movement of goods. The Ld. Commissioner (A) noted that the department's case was based solely on the investigation conducted at the supplier's end without any independent investigation at the respondent's end.

4. Presumption and Assumption as the Basis of the Revenue’s Case:
The Revenue's case was based on the presumption that the invoices issued by M/s VS were fake, and the goods were not received by the respondents. The Ld. Commissioner (A) observed that the department's allegations were presumptive and not supported by corroborative evidence. The adjudicating authority's observation that the documents appeared to be fabricated was deemed insufficient without concrete evidence.

5. Onus of Proof Regarding the Receipt of Goods:
The Ld. Commissioner (A) emphasized that the onus was on the Revenue to prove that the respondents had not received the goods. The respondents provided documentary evidence, including transport documents and purchase registers, to show that they had received the goods. The Ld. Commissioner (A) concluded that the respondents had taken all reasonable steps to ensure the genuineness of the supplier and the receipt of goods, thereby satisfying the requirements under the Cenvat Credit Rules.

Conclusion:
The Tribunal upheld the Ld. Commissioner (A)'s order, setting aside the adjudication order and allowing the Cenvat credit to the respondents. The Tribunal agreed that the Revenue's case was based on presumptions and lacked corroborative evidence. The appeals filed by the Revenue were dismissed, and the impugned order was upheld.

Final Judgment:
The appeals filed by the Revenue are dismissed. The respondents are entitled to avail Cenvat credit as the Revenue failed to substantiate their allegations with concrete evidence. The impugned order is upheld.

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