2019 (12) TMI 548 - AT - Central Excise

CENVAT Credit - duty paying invoices - forged documents - credit has been denied to the Appellants on the ground that the Appellant purchased Scrap of S.S /M.S whereas the invoices were issued for SS Circle, MS Rounds Bars, MS Flats and Pipes falling under chapter 72 which are not their inputs - penalty - HELD THAT - The Appellants have shown purchase of goods in their statutory records and account books and the transactions stands recorded therein. Further no dispute has been raised about the transportation of said goods to the Appellant Units. The Appellant has also shown production of goods from the purchased goods and it stands recorded in books of accounts as well as statutory records. No evidence of falsification of statutory or accounts is on record - Also there is no dispute about the consumption of impugned material and clearance of finished goods manufactured. Even if it is assumed that the dealer s records does not show the purchase of impugned goods, but the fact remains that the Appellant s record are showing receipt of goods. Only on the basis of statements, the cenvat cannot be denied when the records are not held to be untrue or falsified. There are no investigations to the effect that the Appellant purchased goods from elsewhere to the extent of quantity of goods allegedly not received by them. Also there is no evidence to show that the consideration paid for the Appellant s purchase and through banking channels towards alleged fictitious purchase and cash was received back by the Appellants - the revenue could not establish the fraudulent availment of cenvat credit beyond doubt - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of cenvat credit based on alleged forged invoices and fraudulent availment.

Analysis:
The three appeals filed by different entities arose from a common issue regarding the denial of cenvat credit based on forged invoices. The Appellants, engaged in manufacturing Alloy Steel Castings, were accused of availing credit on the basis of invoices issued by M/s H.B. Metals for goods not actually received. The adjudicating authority and the Appellate Commissioner upheld the denial of credit and imposed penalties. The Appellants contested these decisions in the present appeals.

The Appellants argued that they legitimately purchased MS & SS Steel Scrap, SS Cold Rolled Pattas & Pattis, and used them in manufacturing final products. They emphasized that payments were made through proper channels, goods were received in their factory, recorded in books, and used in production. They cited a High Court judgment to support their position that denial of credit solely based on missing purchase invoices was unjustified.

On the other hand, the revenue representative reiterated the findings of the impugned order, asserting that cenvat credit was inadmissible. After hearing both sides and examining the case records, the Member (Judicial) found that the Appellants had recorded the purchase of goods in their statutory records and used them in production. Despite discrepancies in the invoices, the Appellants' records demonstrated the receipt and utilization of the goods. The Member referred to various judicial precedents to support the Appellants' position, emphasizing the importance of reasonable steps taken by the assessee to ensure duty payment on inputs.

In the absence of evidence proving fraudulent availment of cenvat credit, the Member concluded that the revenue failed to establish the Appellants' wrongdoing beyond doubt. Consequently, the impugned orders denying cenvat credit were set aside, and the appeals were allowed with any consequential reliefs. The judgment highlighted the necessity for reasonable diligence by the assessee and emphasized that denial of credit based solely on statements without concrete evidence was unjustifiable.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Ahmedabad showcases the complexities involved in disputes over cenvat credit and the importance of maintaining proper records and following legal precedents to establish entitlement to such credits.