2019 (12) TMI 846 - AT - Central Excise

CENVAT credit - fake invoices - alleged supply of invoices without supply of goods - credit denied relying on various statements from which the Commissioner (Appeals) contended that M/s Shah Foils Ltd. only issued the invoices but the goods were not supplied - HELD THAT - There is no dispute that the goods invoiced under eight invoices were transported and the same was received by M/s Sun Textile Engineer. The physical receipt of the goods have not been questioned in the entire case. The goods have been recorded in the books of M/s Sun Textile Engineers. The payment against the supplies were shown in the books, even though it is partly or otherwise. No investigation was carried out with M/s Sun Textile Engineer regarding the receipt of the goods, accounting in the books, use in the manufacture of final product and the clearance of final product on payment of duty, therefore, the said facts are not in dispute. The finding given by the Learned Commissioner (Appeals) has no leg to stand - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit on inputs received, reliance on statements for denial, reversal of order by Commissioner (Appeals), imposition of duty, penalty, and interest, failure to investigate physical transportation of goods, cross-examination of witnesses, imposition of penalties under Central Excise Rules, disagreement on findings between Adjudicating Authority and Commissioner (Appeals).

Analysis:
The case involved the denial of Cenvat credit to the appellant, who availed credit on inputs used in manufacturing Textile Processing Machines. The denial was based on a Show Cause Notice alleging non-receipt of goods from the supplier, M/s Shah Foils Ltd., under eight invoices. The Adjudicating Authority initially dropped the Notice based on evidence of transportation and payment. However, the Commissioner (Appeals) reversed this decision, imposing duty, penalty, and interest, leading to the appellant's appeal.

The appellant argued that there was no investigation into the physical transportation of goods under the disputed invoices, emphasizing that goods were received and transported, justifying the Cenvat credit. They criticized the Commissioner (Appeals) for not considering fundamental evidence like transportation details and cross-examination results, which supported the appellant's position. The appellant also challenged the imposition of penalties under different provisions, highlighting the lack of evidence supporting the denial of credit.

The co-appellant, M/s Shah Foils Ltd., echoed the appellant's arguments, asserting that they cleared goods on duty payment, and the transportation and receipt of goods were not disputed. They criticized the Commissioner (Appeals) for relying on third-party statements without concrete evidence against them.

The Revenue, represented by the Assistant Commissioner, supported the findings of the impugned order, emphasizing the reliance on statements to deny credit and impose penalties.

Upon review, the Tribunal found that the denial of Cenvat credit was unfounded. The Tribunal noted that no direct evidence existed against the appellant regarding non-supply of goods, emphasizing that statements lacked probity value in this context. It highlighted the lack of inculpatory statements related to the transactions between M/s Shah Foils Ltd. and the appellant, supporting the Adjudicating Authority's decision. The Tribunal emphasized the physical receipt of goods, proper accounting, and lack of dispute over these facts. It concluded that the Commissioner (Appeals) erred in relying solely on statements and set aside the impugned order, allowing the appeals.

In conclusion, the Tribunal's detailed analysis focused on the lack of concrete evidence supporting the denial of Cenvat credit, emphasizing the importance of physical receipt of goods and proper documentation in such cases. The judgment highlighted the need for thorough investigation and consideration of all relevant evidence before imposing penalties or denying credits based on statements alone.