2018 (12) TMI 1020 - AT - Central Excise

CENVAT Credit - no physical verification of stock had been conducted by the Department to substantiate the allegations - principles of natural justice - Held that - In absence of the inputs in question, the corresponding final products could not have been manufactured. Since the Appellant had been maintaining records, the Department ought to have shown how such records were incorrect to corroborate the statements of the transporter recorded by them. When there is a material on record to suggest otherwise than what has been concluded, a contradicting conclusion cannot be arrived at by disregarding the evidence and without discrediting the same. In the absence of any corroborative evidence, the contentions of the Revenue cannot be accepted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of Cenvat credit based on failure to establish physical receipt of certain inputs.
2. Confirmation of demand and imposition of penalty by adjudicating authority.
3. Upholding of adjudication order by Commissioner (Appeals).
4. Appeal before the Tribunal challenging the orders.

Analysis:
Issue 1: The Appellant failed to establish physical receipt of certain inputs leading to a demand for recovery of Cenvat credit. The audit revealed discrepancies, resulting in a Show Cause Notice for recovery of credit along with interest and penalty. The Appellant contended that relevant entries were recorded in statutory registers, and the impugned inputs were used in manufacturing final products. The Department's case relied on statements without physical verification of stock.

Issue 2: The adjudicating authority confirmed the demand for Cenvat credit, along with interest and penalty, imposing additional penalties under Rule 26 of the Central Excise Rules, 2002. The Commissioner (Appeals) upheld this decision, prompting the appeal before the Tribunal.

Issue 3: The Ld. Advocate for the Appellant argued that the invoices in dispute were valid, payments were made through proper channels, and records reflected receipt of inputs. The Tribunal found merit in the Appellant's contentions, emphasizing the necessity of corroborative evidence to challenge the Appellant's documented records.

Issue 4: The Tribunal referenced a judgment by the Hon'ble High Court of Calcutta, highlighting the importance of considering evidence contrary to departmental suspicions and upholding principles of natural justice. Consequently, the Tribunal set aside the impugned order, allowing the appeals filed by the Appellants.