2018 (1) TMI 350 - AT - Central Excise

CENVAT credit - input PVC Resin - credit availed without receipt of goods - case of appellant is that the SCN was issued on the basis of investigation of the input manufacturer M/s. KPIPL and statement of transporters - Held that - It appears that the Central Excise officers recorded the statements of two employees and Director of the appellant company, who stated that they received the goods in their factory. At this stage, the investigating officer should have examined the records and documents including Cenvat accounts and not merely relied on the statement of the third party - denial of cenvat credit and imposition of penalty are not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat Credit without receipt of goods
- Allegation of irregular credit availed for more profitability
- Denial of credit based on investigation at M/s. KPIPL

Analysis:

Issue 1: Availment of Cenvat Credit without receipt of goods
The case involved the appellant, engaged in manufacturing P.V.C Insulated wires and cables, facing a demand for recovery of wrongly availed Cenvat Credit amounting to ?1,39,94,593/- during the period from September 2002 to May 2005. The Central Excise officers visited the factory premises based on information that the appellant availed Cenvat Credit on invoices of input PVC Resin from M/s. KPIPL without receiving the goods. The appellant argued that they received the goods, paid Central Excise duty and sales tax, and produced evidence to support their claim. The Tribunal found that the adjudicating authority's findings were based on assumptions and presumptions, lacking concrete evidence to prove that the appellant did not receive the goods covered by the invoices.

Issue 2: Allegation of irregular credit availed for more profitability
The appellant contended that the allegations were made solely based on statements from the Director and employees of M/s. KPIPL and transporters, ignoring statutory records and documents proving receipt and utilization of goods in manufacturing final products. The Tribunal noted that the adjudicating authority's assumption that the appellant procured non-duty paid material for manufacturing lacked supporting evidence. The Tribunal emphasized that records and documents provided by the appellant should not be disregarded based on uncorroborative statements from third parties.

Issue 3: Denial of credit based on investigation at M/s. KPIPL
The Tribunal referred to a similar case involving M/s. UKB Electronics Pvt. Ltd., where the denial of Cenvat Credit was set aside due to lack of concrete evidence supporting the denial. The Tribunal highlighted the necessity of corroborative evidence to prove that the appellant did not physically receive the inputs for which Cenvat Credit was availed. The Tribunal emphasized the importance of examining statutory records, invoices, and payment details to validate the receipt and utilization of inputs in manufacturing final products. The Tribunal concluded that the denial of Cenvat Credit and imposition of penalty were unjustified, setting aside the impugned order and allowing the appeal filed by the appellant.