2018 (6) TMI 116 - AT - Central Excise

CENVAT credit - non-receipt of inputs - some of the vehicles found non existence and not capable of transportation of goods are other than tankers - main reason to issuance of the show cause notices to denial of the cenvat credit to the assessee is that the trasnport vehicles are not entered at ICCs, therefore, it was alleged that the assessee has not received the inputs. Held that - A similar issue came up before this Tribunal on the same investigation in the case of M/s Adhunik Alloys Ltd. 2016 (5) TMI 894 - CESTAT CHANDIGARH wherein this Tribunal has held that merely, the vehicles in question were not entered at ICC does not dis-entitle to the appellant to avail cenvat credit on the inputs in question. As the appellant has produced the certificate issued by Excise & Taxation Officer of Punjab certifying that these goods have been received in their factory, therefore, the cenvat credit cannot be denied. During the course of adjudication, the assessee has produced certificate issued by the Excise and Taxation officers, Ldh certifying that the assessee has received the material on each and every one of the disputed invoices and the same has been reconfirmed by the adjudicating authority from Excise and Taxation officers, Ldh. who vide his certificate confirmed that certificate dated 10.10.2006 was duly issued by the office. As one of the Government Department has already certified that on the basis of the invoices in question, the asseessee has received the goods, therefore, relying on the decision of this Tribunal in the case of M/s Adhunik Alloys Ltd., the assessee is entitled to avail cenvat credit on the invoices in question on which the adjudicating authority allowed the cenvat credit to the assessee. CENVAT credit denied on the basis of the statement of Shri. Kamal Gupta son of the owner of M/s Gupta Transporter Company, who has stated that never transported any material for M/s Lakra Oil Trading (LOTC) - cross-examination not granted - Held that - The appellant sought cross examination of Shri. Kamal Gupta. The said cross examination was not granted to the assessee. In that circumstances, the statement given by Shri. Kamal Gupta is inconclusive and the same cannot be relied upon - demand set aside. Demand of ₹ 1,75,350/- that has been confirmed on the basis of the statement of Shri. G.C. Arya of M/s APPL - Held that - The said statement was retracted by Shri. G.C Arya at first available opportunity and no cross examination was granted to the asssessee of Shri. G.C. Arya, therefore, the statement recorded of Shri. G.C. Arya have no relevance to deny cenvat credit as the same has not been tested by way of cross examination - demand set aside. Demand confirmed on the ground that the vehicles which have been mentioned in the invoices are not capable of transportation of goods in question as the vehicles are not tankers - Held that - Admittedly, without tankers, the impugned goods cannot be transported and the appellant has failed to come up with any supporting explanation to the allegation. In that circumstances, the demand of ₹ 1,01,048 is confirmed - penalty also not imposable. Appeal allowed in part.

Issues Involved:
1. Denial of Cenvat Credit on Furnace Oil
2. Statements of Transporters and Suppliers
3. Vehicle Capability for Transporting Goods
4. Certification by Sales Tax Department
5. Appeal Authorization by the Department

Detailed Analysis:

1. Denial of Cenvat Credit on Furnace Oil:
The main issue was whether M/s Nandan Auto Tech Ltd. received the furnace oil for which they availed Cenvat credit. The intelligence report indicated that the furnace oil was not actually received at the factory premises, and this was supported by discrepancies in the records at the Information Collection Centres (ICCs) of the Punjab Government. However, the assessee argued that various persons had admitted during cross-examination that they transported the goods to M/s Nandan Auto Tech Ltd. The adjudicating authority had confirmed a demand of ?3,73,537/- based on the statements of transporters, but the assessee contended that these statements were obtained without allowing cross-examination, thus should not be relied upon.

2. Statements of Transporters and Suppliers:
The demand of ?1,75,350/- was based on the statement of Shri G.C. Arya, Manager (Accounts) & Authorised Signatory of M/s APPL, who initially stated that the furnace oil was diverted and not supplied to the assessee. However, Shri Arya retracted his statement, and no further corroborative evidence was provided by the Department. The assessee was not granted cross-examination of Shri Arya, making his statement inadmissible for confirming the demand.

3. Vehicle Capability for Transporting Goods:
A part of the demand amounting to ?1,01,048/- was confirmed because the vehicles mentioned in some invoices were not tankers, which are necessary for transporting furnace oil. The assessee argued that the vehicle numbers might have been erroneously mentioned or the tankers might have been using false number plates. However, the Tribunal found that without tankers, the transportation of the goods was not feasible, and thus, this part of the demand was confirmed.

4. Certification by Sales Tax Department:
The assessee produced certificates from the Punjab State Sales Tax Department, confirming that the disputed invoices were for materials received at the factory. The Tribunal noted that similar issues had been resolved in favor of the assessee in the case of M/s Adhunik Alloys Ltd., where the Tribunal had accepted the certificates from the Sales Tax Department as evidence of receipt of goods. Therefore, the Tribunal found that the Cenvat credit could not be denied merely because the vehicles were not recorded at the ICCs.

5. Appeal Authorization by the Department:
The assessee raised a preliminary objection regarding the authorization issued by the two Chief Commissioners for filing the Department's appeal. The authorization did not mention the names of the Chief Commissioners, rendering the appeal authorization faulty and the Department’s appeal infructuous.

Tribunal's Decision:
The Tribunal dismissed the appeal filed by the Revenue and partially allowed the appeal filed by the assessee. The demand of ?1,01,048/- was confirmed along with interest, but the rest of the demand was set aside. No penalty was imposed on the assessee. The Tribunal emphasized the importance of corroborative evidence and proper cross-examination in confirming demands based on statements.

Order:
(A) The demand of ?1,01,048/- is confirmed against the assessee along with interest.
(B) No penalty is imposable on the assessee.
The appeals were disposed of accordingly.

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