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2019 (5) TMI 1628 - AT - Central ExciseCENVAT Credit - fake documents - credit availed without accompanied goods - Rule 4(1) of Cenvat Credit Rules, 2004 - cross-examination of witnesses denied - HELD THAT - Department has made out a case of irregular availment of cenvat credit mainly based on the statement of Shri Amit Gupta and transporters, but no cross examination of the witnesses was provided to the appellants. One of the witnesses has retracted his earlier statement. Surprisingly, in the instant case, no inquiry was made from the customers of the appellant company. All the transactions related to inputs purchased was duly recorded in the book of accounts and inventory records. The appellant have purchased the goods from the registered dealer. When it is so, then it is expected by the department to make a inquiry about the genuineness of the supplier. Ultimately, the issue in each case is whether, within the meaning of Rule 9 (3) of the Rules of 2004, the assessee has taken reasonable steps to ensure that the inputs in respect of which he has taken CENVAT credit were goods on which appropriate duty of excise was paid. Once it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the Rules to cast an impossible or impractical burden on the assessee. Appeal allowed - decided in favor of appellant.
Issues:
1. Admissibility of cenvat credit under Rule 4(1) of Cenvat Credit Rules, 2004. 2. Allegations of irregular availment of cenvat credit based on un-genuine invoices. 3. Lack of cross-examination of witnesses and inquiry from customers of the appellant company. 4. Entitlement of buyer to claim Cenvat Credit based on invoices received. 5. Absence of evidence regarding delivery of goods or validity of invoices. 6. Non-inclusion of a key individual alleged to be involved in the case. 7. Compliance with Rule 9(3) of the Cenvat Credit Rules, 2004. Analysis: 1. The case involved a dispute over the admissibility of cenvat credit amounting to ?25,57,370 availed by the appellant, challenged by the Department under Rule 4(1) of the Cenvat Credit Rules, 2004. The Department proposed reversal of the credit along with interest and penalties, leading to subsequent orders disallowing the credit and confirming the demand. 2. The appellant argued that similar issues had been decided in their favor in previous cases post a common investigation by DGCEI, citing Final Orders dated 11.05.2018 and 12.02.2019. They sought a similar outcome for the present appeal. 3. The Department contended that the appellant had availed cenvat credit based on un-genuine invoices, reflecting a contravention of the Cenvat Credit Rules, 2004. They emphasized the need to decide each case based on its own facts, asserting the validity of the order disallowing the credit. 4. The Tribunal noted the Department's case relied mainly on statements without providing an opportunity for cross-examination. It highlighted the absence of inquiries from the customers of the appellant, despite proper recording of transactions in the appellant's records. The Tribunal referenced a judgment supporting the buyer's entitlement to claim credit based on the assumption of the supplier's excise duty discharge. 5. The Tribunal observed a lack of evidence from the Department regarding the non-delivery of goods or the alleged bogus nature of invoices, except for a statement from a key individual not included in the proceedings. 6. The absence of the key individual, alleged to be central to the case, without any penalties or demands proposed against them, raised concerns about the completeness of the investigation and proceedings. 7. Finally, the Tribunal analyzed the compliance with Rule 9(3) of the Cenvat Credit Rules, 2004, emphasizing the need for the assessee to take reasonable steps to ensure the duty payment on inputs. Considering the previous favorable orders on similar issues, the Tribunal set aside the challenged order, allowing the appeal. This detailed analysis covers the various issues raised in the judgment, providing a comprehensive overview of the legal arguments and findings in the case.
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