2018 (6) TMI 375 - AT - Central Excise

CENVAT credit - fake invoices - The allegation of the department that the appellant had not received the quantity of inputs mentioned under these invoices, but erroneously availed the Credit - whether the appellant had correctly availed CENVAT Credit of the duty paid as mentioned in the invoices issued by the registered dealer M/s. Ushmi Ispat Pvt. Ltd., Mumbai? - Held that - In the absence of evidences, to establish the fact of receipt of the inputs in their factory, when the vehicle numbers mentioned in the respective invoices, have been found to be incapable of carrying the quantity of goods mentioned under respective invoices, it is difficult to accept the contention of the appellant that the goods were received and used in or in relation to the manufacture of finished goods. It is necessary to be eligible to avail credit of the duty paid on respective invoices, the appellant should establish that not only the appropriate duty on the quantity of goods mentioned in the invoices have been paid, but also the quantity of goods have been received and used in or in relation of the manufacture of finished goods and the burden lies on the assessee when discrepancies are noticed in the input invoices on which credit availed - In the absence of corroborative evidences of receipt, there is no reason to interfere with the order of the Ld. Commissioner (Appeals) as far as confirmation of CENVAT Credit of ₹ 6,48,777/- with interest and penalty is concerned. The impugned order is modified to that extent and the appellant are eligible to discharge 25% of the penalty imposed under Rule 15(2) of Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944, subject to the fulfillment of conditions mentioned under the said provisions - appeal allowed in part.

Summary

Issues:
- Availing CENVAT Credit without actual receipt of material
- Reliance on evidence of Registration Transport Office (RTO)
- Allegation of antedated invoices
- Manipulated and bogus weighment slips
- Burden of proof on the appellant
- Discharge of penalty under Rule 15(2) of Cenvat Credit Rules

Availing CENVAT Credit without actual receipt of material:
The appellant availed CENVAT Credit on raw materials without actual receipt in their factory, leading to a show cause notice for recovery. The Commissioner confirmed the demand with interest and penalty. The matter was remanded to re-examine evidence, but the demand was again confirmed. The appellant failed to provide evidence of material receipt, leading to the rejection of their appeal by the Commissioner.

Reliance on evidence of Registration Transport Office (RTO):
The Commissioner relied on RTO evidence certifying that vehicle registration numbers on invoices were either non-existent or incapable of carrying the mentioned goods. This, coupled with antedated invoices and manipulated weighment slips, led to the conclusion that the appellant erroneously availed credit in violation of CENVAT Credit Rules.

Allegation of antedated invoices and manipulated weighment slips:
The Commissioner found discrepancies in the sequence of invoices and weighment slips, indicating manipulation and antedating. The appellant's failure to rebut these observations weakened their case, as the burden of proof lay on them to establish receipt and usage of goods in manufacturing.

Burden of proof on the appellant:
To avail credit, the appellant needed to prove payment of duty on goods received and used in manufacturing finished products. Lack of corroborative evidence of material receipt made it challenging to accept their claim, especially when discrepancies in invoices were noted.

Discharge of penalty under Rule 15(2) of Cenvat Credit Rules:
Although the confirmation of CENVAT Credit was upheld, the appellant was granted the opportunity to discharge 25% of the penalty imposed under Rule 15(2) of Cenvat Credit Rules, subject to fulfilling prescribed conditions. This modification allowed partial relief to the appellant concerning penalty imposition.

In conclusion, the Tribunal partly allowed the appeal by modifying the order to enable the appellant to discharge a portion of the penalty. The decision highlighted the importance of providing concrete evidence to support claims of availing credit under CENVAT rules, emphasizing the burden of proof on the assessee in cases of discrepancies or lack of documentation.