2018 (1) TMI 478 - AT - Central Excise

CENVAT credit - duty paying documents - fake and parallel invoices - scope of SCN - Held that - The first appellate authority clearly records that the instant show cause notice dated 2.9.2013 which has been adjudicated by the lower authority and in appeal before him was in respect of disallowance of cenvat credit on the ground that the respondent No.1, Nilesh Steel & Alloys Pvt. Ltd., had not received the goods in the factory premises - the factual position as to confirmation of duty liability of Ravi Steel Industries is not controverted by the Revenue in the grounds of appeal. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against order-in-appeal, Availing ineligible cenvat credit, Duty demand confirmation, Confiscation of finished goods, Penalty imposition, Burden of proof on duty paid inputs, Non-receipt of goods, Self-assessment procedure verification, Record of transactions, Receipt of duty paid inputs, Double taxation concern, Bonafide nature of transaction, Denial of credit.

Analysis:
The appeal was filed by the Revenue against an order-in-appeal regarding the availing of ineligible cenvat credit by the respondent based on fake invoices. The investigation revealed that the cenvat credit was ineligible as the invoices were fake. A show cause notice was issued for the demand of the credit availed without receiving the goods. The lower authorities confirmed the duty demand, imposed a penalty, and held the finished goods liable for confiscation. The first appellate authority set aside the order-in-original against the respondent. The departmental representative argued that the credit availed was incorrect as the duty paid character of the inputs was not proven, and the goods were not received at the factory premises. The respondent was accused of working under self-assessment without verifying duty liability, leading to incorrect credit availing.

The first appellate authority noted that two show cause notices were issued, one regarding penalty imposition on non-duty paid goods and the other for disallowance of cenvat credit due to non-receipt of goods. The authority found the transactions to be bona fide and that the duty liability of the supplier was confirmed. The appellate authority considered relevant rules and judgments and concluded that the goods were received based on banking channel payments and that disallowing credit would result in double taxation. The authority emphasized that the buyer cannot be expected to verify the supplier's duty payment records. The factual position on duty liability of the supplier was not contested by the Revenue in the appeal grounds.

The appellate tribunal upheld the first appellate authority's findings, stating that the order was correct and legal, requiring no interference. The impugned order was upheld, and the appeal was rejected.