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2022 (6) TMI 912 - AT - Central ExciseCENVAT Credit - availment of credit fraudulently without receipt of inputs - whether appellant M/s. Santram Metals Alloys Pvt. Ltd. are eligible to Cenvat credit on the basis of documents which are claimed to have been received along with inputs invoices issued by the units located at Jammu? - HELD THAT - The officers visited the appellant s factory on the basis of information that the appellant availed the Cenvat credit on invoices, without actual receipt of the goods. However revenue did not find any shortage/excess of inputs or finished goods in factory of Appellant. Officers also seized records/ documents related to the receipt of the goods and availment of cenvat credit. The Revenue could not bring any evidence from the Appellant s factory by which it can be shown that the goods covered under the invoices were not received by them. In the entire investigation the evidences which were relied upon are related to transporters/ RTO check post. On the basis of such third party evidences revenue alleged that goods were not received by the appellant in their factory. Contrary to these evidences the fact that the appellant have recorded the receipt of the goods in their cenvat account, the purchase of the goods under the invoices in question were booked in books of account and raw material receipt account, the said purchased goods also shown for use in manufacturing of dutiable finished goods. Merely on the basis of the transporter records and RTO check-post reports, it cannot be concluded that the inputs were not received by the appellant. In the absence of any evidence to the contrary, we find that the denial of Cenvat credit on the basis of the investigations conducted at the third party end cannot be adopted as the sole basis for denial of credit. The allegation of the Revenue that the appellant have not received the inputs made against the appellant are not sustainable and thus, the impugned orders are liable to be set aside - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Eligibility of Cenvat credit on the basis of documents claimed to be received with inputs invoices from units located at Jammu. 2. Legitimacy of the refund claim filed by the appellant for the period prior to the company's existence. 3. Validity of the investigation conducted by the department based on transporter and RTO check-post records. Issue-wise Detailed Analysis: 1. Eligibility of Cenvat credit on the basis of documents claimed to be received with inputs invoices from units located at Jammu: The primary issue was whether M/s Santram Metal Alloys Pvt. Ltd. was eligible for Cenvat credit on invoices from Jammu-based units without actual receipt of goods. The investigation by DGCEI alleged that the copper ingots were not received in the factory and were not used in manufacturing final products. The appellant argued that the vehicles used for transport were capable of carrying the consignment and had passed through the Shamlaji Check Post. They contended that the transport company's failure to maintain records should not lead to denial of Cenvat credit. The Tribunal found that the appellant had recorded the receipt of goods in their Cenvat account and raw material register, made payments through cheques, and used the inputs in manufacturing dutiable finished goods. The Revenue could not provide evidence from the appellant's factory to show non-receipt of goods. The Tribunal concluded that denial of Cenvat credit based on third-party evidence (transporter records and RTO check-post reports) was not justified. The statutory records maintained by the appellant did not indicate absence of inputs, and there was no evidence of unaccounted inputs being used. The Tribunal thus held that the denial of Cenvat credit was not sustainable and set aside the impugned orders. 2. Legitimacy of the refund claim filed by the appellant for the period prior to the company's existence: In Appeal No. E/478/2011-DB, the appellant was directed to debit Rs. 24,00,000/- in their Cenvat account during the investigation. A show cause notice proposed recovery of Cenvat Credit for the period 11.09.2004 to 17.11.2006. The Tribunal noted that the company was established in 2006 and obtained registration in September 2006. Therefore, the recovery proposed for the period before the company's existence was legally incorrect. The department issued another show cause notice to Omkar Metal & Alloys for the period up to 30.08.2006. The Tribunal remanded the matter to decide the noticee against whom the demand should be confirmed. The appellant filed a refund claim, which was rejected as premature by the adjudicating authority. The Tribunal found that the remanded matter was still under process and not finalized by the Commissioner. Consequently, the appellant's refund claim was not entertained. 3. Validity of the investigation conducted by the department based on transporter and RTO check-post records: The department's investigation relied on transporter records and RTO check-post reports to allege non-receipt of goods. The appellant argued that transporters might avoid check-posts due to over-weighment and take alternative routes. The Tribunal observed that the department did not bring any evidence from the appellant's factory to prove non-receipt of goods. The statutory records maintained by the appellant, including the Cenvat account and raw material register, indicated receipt and use of inputs in manufacturing. The Tribunal held that the burden of proving non-receipt of inputs lay with the Revenue, which failed to provide sufficient evidence. The Tribunal referred to previous judgments that supported the appellant's case, emphasizing that allegations of non-receipt of inputs could not be upheld based solely on transporter records without corroborative evidence. The Tribunal concluded that the denial of Cenvat credit based on third-party evidence was not justified and allowed the appeals with consequential reliefs. Conclusion: The Tribunal held that the allegations of non-receipt of inputs and fraudulent availing of Cenvat credit by the appellant were not sustainable. The denial of Cenvat credit based on transporter records and RTO check-post reports was not justified. The Tribunal set aside the impugned orders and allowed the appeals filed by the appellants with consequential reliefs. The refund claim for the period prior to the company's existence was not entertained as the remanded matter was still under process.
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