2022 (8) TMI 829 - AT - Central Excise

CENVAT Credit - duty paying documents - credit availed on the basis of invoices of dealers which are claimed to have been received along with inputs - denial in the ground of investigations by third party - 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. It is found that 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. When the statutory records maintained by them do not disclose absence of receipt of inputs in the factory and there is no cogent evidence of disposal of the same goods elsewhere the credit cannot be denied. It is also not the case of the department that the appellant have procured some unaccounted inputs to cover up the quantity of input shown in the invoices. There is no allegation by the department regarding the financial flow back that against the invoices for which the payments were made through cheque, any cash payment was received by the appellant. With all these undisputed facts, 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 - 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 Appellant correctly availed the cenvat credit. Further, the department nowhere raised any dispute on the said records. Thus the contention of the department that appellant have availed cenvat credit without receipt of goods (raw material) is not tenable. Further, as the Appellant have discharged the Central Excise duty on the final product manufactured out of the alleged raw material, if the department is of the opinion that the alleged goods was not received by the appellant then it is the onus on the department to prove that any other alternative raw material was used in the final products, department has failed to do so. 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:
1. Admissibility of Cenvat credit based on invoices of registered dealers.
2. Allegations of fraudulent availment of credit without receipt of goods.
3. Proper documentation and accounting requirements under Central Excise Act and Cenvat Credit Rules.

Issue 1: Admissibility of Cenvat credit based on invoices of registered dealers

The case involved M/s Vipul Copper Pvt. Ltd. availing Cenvat credit facility based on invoices from registered dealers for raw material. The investigation focused on the transportation of goods from Delhi to Nadiad, raising doubts on the receipt of inputs by the appellant. The appellant argued that the goods did travel between Nadiad and Ahmedabad, and proper documentation, including octroi receipts, invoices, and accounting records, supported the receipt and utilization of inputs. The appellant contended that the department's case lacked evidence of non-receipt of goods at their factory, emphasizing compliance with statutory requirements for availing credit.

Issue 2: Allegations of fraudulent availment of credit without receipt of goods

The Revenue alleged that M/s Vipul Copper Pvt. Ltd. fraudulently availed Cenvat credit without physically receiving the inputs. However, the tribunal found no evidence of shortage/excess of inputs or finished goods at the appellant's factory. The investigation primarily relied on third-party evidence related to transporters and RTO check posts, without concrete proof of non-receipt of goods by the appellant. The tribunal emphasized that statutory records, including cenvat accounts and payment records, supported the receipt and utilization of inputs, dismissing the department's contention of credit denial based solely on third-party investigations.

Issue 3: Proper documentation and accounting requirements under Central Excise Act and Cenvat Credit Rules

The tribunal highlighted the importance of complying with Cenvat Credit Rules 2004, emphasizing the receipt of goods by the manufacturer for availing credit based on invoices. It noted that the appellant had recorded the receipt and utilization of goods, maintained proper accounts, and made payments through cheques, meeting the prescribed requirements. Referring to precedents, the tribunal held that burden of proving non-receipt of inputs rested with the Revenue, and in the absence of conclusive evidence, denial of credit was unwarranted. The tribunal set aside the impugned orders, allowing the appeals filed by the appellants with consequential reliefs.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD highlights the complexities of the case, focusing on the admissibility of Cenvat credit, fraudulent allegations, and compliance with legal documentation and accounting standards under the Central Excise Act and Cenvat Credit Rules.

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