2018 (3) TMI 1235 - AT - Central Excise

CENVAT credit - duty paying invoices - invoices issued by the supplier viz. M/s Dewas Conductors, a non-existent firm - Held that - during the period when the goods were received by the appellant, the supplier was registered dealer of the Central Excise department. Therefore, it cannot be said that the supplier was non-existent during the relevant time - Moreover, the appellant is a bona fide purchaser of the goods in question has taken all precautions like invoices having full details, made payment through account payee cheque and entered the same in their statutory records - credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit based on invoices from a non-existent supplier.

Analysis:
The appellant appealed against the denial of Cenvat credit based on invoices from M/s Dewas Conductors, a supplier alleged to be non-existent. The investigation revealed that the supplier issued invoices solely for the appellant to avail inadmissible Cenvat credit without transferring any goods. A show cause notice was issued, leading to the denial of credit, imposition of penalties, and confirmation of the demand by lower authorities. The appellant contended that they were genuine purchasers who received and used the goods, duly recorded the transactions, and paid through legitimate means. They argued that the supplier was not involved in the proceedings, and no evidence corroborated the allegations. The Revenue claimed that the appellant's partner admitted guilt and voluntarily reversed the credit. However, the appellant maintained their innocence, emphasizing their compliance and the lack of evidence against them.

The Tribunal considered the lack of evidence supporting the Revenue's allegations. Despite the supplier being found non-existent during the investigation, they were a registered dealer at the time of supplying goods to the appellant. The appellant demonstrated due diligence in recording transactions and using the goods in their final products, cleared with duty payment. The absence of proof regarding the source of the inputs in the absence of accompanying invoices raised doubts. Furthermore, the supplier was not included in the show cause notice for penalties. Consequently, the Tribunal ruled in favor of the appellant, overturning the impugned order and granting relief due to the benefit of doubt.