2018 (2) TMI 691 - AT - Central Excise

CENVAT credit - fake invoices - It was alleged that the appellant did not receive the goods but have taken Cenvat credit on the strength of invoices without receipt of goods - Held that - the Central Excise Officers did not carry out any investigation at the end of M/s Shanker Traders - it is not conclusively established that the appellant did not receive the inputs - the SCN dated 20/04/2012 is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of Cenvat credit availed by the appellant based on invoices without receipt of goods.
2. Allegation of association between First Stage Dealer and Second Stage Dealer.
3. Sustainment of Show Cause Notice and Order-in-Appeal by the Commissioner (Appeals).

Analysis:
1. The appellant availed Cenvat credit on Iron & Steel Scrap based on an invoice without receiving the goods. Central Excise Officers alleged that the appellant did not receive the goods but claimed the credit. The Show Cause Notice proposed reversing the credit amount. The Order-in-Original confirmed the demand and imposed a penalty. The Commissioner (Appeals) upheld this decision. The Tribunal reviewed the case and found that the appellant produced payment details to M/s Shanker Traders and stated they received the goods as per the invoices. The Tribunal held that the investigation did not extend to M/s Shanker Traders, and it was not conclusively proven that the appellant did not receive the inputs. Consequently, the Show Cause Notice was deemed unsustainable, and the Order-in-Appeal was set aside, allowing the appeal and granting the appellant consequential relief.

2. The investigation focused on the alleged association between M/s Isha Enterprises and M/s Shanker Traders. Statements were recorded under Section 14 of the Central Excise Act, 1944, to establish the flow of goods and payments. The appellant's involvement with M/s Shanker Traders was questioned based on the invoices indicating M/s Isha Enterprises as the First Stage Dealer. However, the Tribunal observed that the appellant provided evidence of payments to M/s Shanker Traders and claimed to have received the goods against the invoices. The lack of investigation at M/s Shanker Traders' end raised doubts about the allegations, leading to the Tribunal's decision to set aside the Order-in-Appeal.

3. The Commissioner (Appeals) upheld the Order-in-Original, confirming the demand and penalty imposed on the appellant. The Tribunal's analysis of the case highlighted the discrepancies in the investigation and the appellant's submission of payment details and statements regarding receipt of goods. The Tribunal's decision to overturn the Order-in-Appeal was based on the lack of conclusive evidence proving that the appellant did not receive the inputs as claimed in the Show Cause Notice. The appellant's entitlement to consequential relief was recognized by the Tribunal, emphasizing the importance of substantiated investigations and evidence in such matters to ensure fair adjudication.