2023 (5) TMI 759 - AT - Central Excise

CENVAT Credit - fake invoices - sourcing only the Cenvatable Credit invoices without actual receipt of the goods - availment of Cenvat Credit not due on the strength of the eight invoices issued by the registered dealer - HELD THAT - It has been an admitted position both by the supplier of goods, as well as the recipient thereof, that they have been negotiating the sales through the said two unregistered dealers. In fact the registered dealer has submitted, to negotiate supplies of manufactured goods through traders, for sale of his goods. The appellant relies heavily on Board s of Circular no. 1003/10/2015- CX dated 05.05.2015. It is noticed that the said circular of the Board caters to a situation as herein and was based upon representations received from the trade. Vide para 3 of the circular, the Board has spelled out the purpose behind amending Central Excise Rules 2002 and inserting two provisos (third fourth) in Rule 11(2) thereof. Para 3 of the circular states that the intendment for amendment was to allow an additional facility for direct transport of goods from the manufacturer to the consignee who avails Cenvat Credit based on the cenvatable invoices issued by the registered dealer. It further mentions that this change was so brought about to obviate the need for goods to be brought to the premises of registered dealers for subsequent transport of the goods to the consignee. For earlier period, the appellant has adverted to Circular No. 218/52/96-CX dated 04.06.1996 concerning transit sale movement of goods under Rule 52-A invoice. Moreover, even the circular referred supra clearly states that the impugned changes need to be read harmoniously keeping the governments intention in mind and that these were by way of additional facility to registered dealer for direct dispatch of goods from the manufacturer to consignee when they were issuing cenvatable invoice. When non receipt of goods by the appellant, is not substantiated, it would not be appropriate to deny them the facility of Cenvat Credit availment on the strength of the invoice of the registered dealer, duly accounted for in their RG-23A-Pt.I II. The department s contention of mere receipt of documents and no goods were supplied is without even a toehold of substance. It is at best only presumed or assumed that the appellants had not received the said goods as per the said cenvatable invoices issued. There is no sound basis to allege so and harbor such a belief by the department - the situation for supply of goods herein is specially provided for in Rule 11(2) proviso and it provides for availment of Cenvat Credit on the strength of the said invoices issued by the registered dealer. Further, the provisions have been made applicable mutatis mutandis in case of a first stage dealer or a second stage dealer (refer Rule 11(7) of the Central Excise Rules 2002. There is nothing to disentitle the availment of Cenvat Credit when such facility is clearly envisaged in law and the intention of the government so to do also spelled out by way of circular to promote/facilitate ease of doing business, and the elaborate circumstantial evidence indicating the receipt of the goods. Thus as the impugned goods have been found to be duly accounted for in statutory records, payments made, transportation details indicated in the invoices and as there is not an iota of evidence to suggest non-receipt of goods by the appellants, Cenvat Credit therefore cannot be denied - Also since it is not the case that no goods were produced by the appellants and also under the circumstances no alternative receipt/supply of goods for such manufacture has been brought out by the department, the charge levelled gets demolished under its own weight. The Tribunal has also so held and allowed credit in the case of M/S. DASHMESH CASTINGS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, CHANDIGARH 2015 (4) TMI 522 - CESTAT NEW DELHI . In the case of APOLLO METALEX PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., NOIDA 2015 (10) TMI 960 - CESTAT NEW DELHI , the Tribunal held that it was not correct to disallow credit on the strength of invoices issued by unregistered dealer (intermediate supplier), when actual receipt of goods was not disputed. The order of the Learned Commissioner passed in appeal is therefore set aside - appeal filed by the party is allowed.

Summary

Issues:
The case involves the disallowance of Cenvat Credit by the Adjudicating Authority, imposition of penalty, and demand for interest under Rule 15(2) of Cenvat Credit Rules 2004.

Details:
The appellant, a manufacturer exporter of agricultural machinery, availed Cenvat Credit based on invoices issued by a registered dealer through unregistered dealers for raw materials. The department alleged that the appellant did not receive the goods but only the invoices, contravening the Act and Rules.

The department contended that the appellant unlawfully benefited from cenvatable invoices without actual receipt of goods, invoking an extended period of limitation. However, the appellant argued that they received the goods directly at their site, supported by Board's Circular No. 1003/10/2015-C, which allows credit based on invoices issued by the registered dealer.

The Circular aimed to facilitate direct transport of goods from manufacturer to consignee, eliminating the need for goods to pass through registered dealers. The appellant also cited Circular No. 218/52/96-CX regarding transit sale movement of goods under Rule 52-A invoice.

The Tribunal found that the appellant had accounted for the impugned goods in their records, with evidence of payments and transportation details. As there was no proof of non-receipt of goods and the appellant had not disputed actual production of goods, the Cenvat Credit could not be denied. Previous Tribunal decisions supported this stance, leading to the appeal being allowed and the Commissioner's order set aside.