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2021 (6) TMI 28 - AT - Central ExciseCENVAT Credit - returned goods under Rule 16(1) of Central Excise Rules, 2002 - denied on the ground that the credit has been taken by the appellant on fake letter issued by the recipient of the goods - HELD THAT - In the statement of M/s. Adarsh Enterprises and M/s Gandhi Springs, it is clearly mentioned that they have not returned the goods but produced the ledger account. The ledger accounts are with the department, the department could have verified their statement is correct or not? By producing the ledger account. The said documents have been hidden by the department and not brought on record, therefore, the allegation without evidence is not acceptable in the law. Further, the appellant sold the goods to M/s Sikkim Ferro Alloy but neither any investigation nor statement ever recorded during investigation of M/s Sikkim Ferro Alloy. In the circumstance, investigation conducted by the department is faulty, therefore, on the basis of faulty investigation, credit of ₹ 6,75,872/- cannot be denied to the appellant. Appeal allowed - decided in favor of appellant.
Issues:
Denial of credit on returned goods under Rule 16(1) of Central Excise Rules, 2002 based on alleged fake letter issued by the recipient of the goods. Analysis: The appellant appealed against the denial of credit amounting to ?6,75,872 on returned goods under Rule 16(1) of Central Excise Rules, 2002, citing that the credit was taken based on a letter alleged to be fake. The appellant sold goods to Sikkim Ferro Alloy, which were later returned by consignees M/s. Adarsh Enterprises and M/s. Gandhi Springs. Investigation revealed discrepancies, with the consignees denying returning any goods and presenting ledger accounts as evidence. The appellant contended that the investigation was incomplete as no inquiry was made at Sikkim Ferro Alloy's end and that the ledger accounts were not part of the show cause notice. The appellant argued against denial of credit solely on presumption. The respondent opposed the appellant's contentions, citing statements from consignees denying returning the goods as the basis for denying credit. Both sides presented their arguments, leading to a thorough examination of the records by the tribunal. The tribunal noted that the statements of M/s. Adarsh Enterprises and M/s. Gandhi Springs indicated no return of goods but highlighted the absence of verification of their ledger accounts by the department. The tribunal found fault in the investigation process, pointing out the lack of inquiry at Sikkim Ferro Alloy's end and the failure to produce crucial documents on record. Consequently, the tribunal held that denial of credit based on faulty investigation was unjustifiable in law. The tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential relief deemed appropriate.
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