2010 (4) TMI 297 - HC - Central Excise

Statement of the buyers u/s 14 wrong availment of credit - The Commissioner denied the Modvat credit on the ground that buyers to whom, blended yarn was supplied have denied receipt of the blended yarn. - The Tribunal allowed Appeal of the assessee holding that the documentary evidences as well as other evidences prove receipt of the material. So demand cannot be confirmed on the basis of statements of certain buyers Held that - The dispute raised by Revenue is purely of fact and no substantial question of law is involved. As per Revenue, the assessee has availed credit without actually receiving and utilizing the inputs for final product whereas as per assessee, they had actually received the material and utilized the same in the manufacture of their finished goods. The Revenue is relying upon various statements and samples drawn during the course of search. On analysis of evidence on record, the Tribunal has categorically found that samples and statements of buyers do not prove beyond doubt that material has not been received, rather observations of the learned Commissioner and documentary evidence prove that material was actually utilized by the assessee for manufacturing of final product. Tribunal order in favor of assessee upheld

Summary

Issues:
1. Challenge to the Order of Customs, Excise and Service Tax Appellate Tribunal by Revenue.
2. Admissibility of credit on inputs for a manufacturer.

Analysis:
1. The Revenue challenged an order passed by the Customs, Excise and Service Tax Appellate Tribunal, where the Tribunal allowed the appeal of the respondent assessee. The Revenue raised questions of law regarding the negation of a confessional statement and the admissibility of credit on inputs. The respondent, engaged in manufacturing various yarns, was accused of wrong availment of Modvat credit. The Adjudicating Authority disallowed credit and imposed a penalty. The Tribunal, however, found in favor of the assessee based on documentary and other evidence proving the receipt of materials, leading to the Revenue's appeal. The High Court analyzed the contentions of both parties, emphasizing the documentary evidence presented by the respondents, including registers, declarations, and test reports, which supported the utilization of Polyester Filament Yarn in the manufacturing process. The Court concluded that the findings of the Tribunal were based on substantial evidence, dismissing the appeal as devoid of merits.

2. The second issue revolved around the admissibility of credit on inputs for the manufacturer. The Revenue alleged that the manufacturer did not receive and utilize Polyester Filament Yarn as claimed for availing credit. The Commissioner denied Modvat credit based on the denial of receipt by buyers. The Tribunal, however, found in favor of the assessee citing documentary evidence and statements of buyers that supported the utilization of the material in the final product. The High Court examined the evidence presented, including registers, declarations, and test reports, which confirmed the use of Polyester Filament Yarn in manufacturing. The Court rejected the Revenue's contention, stating that the findings of fact by the Tribunal were based on substantial evidence and not unreasonable or perverse. Consequently, the Court held that no substantial question of law was involved, and the appeal lacked merit, ultimately dismissing it.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of documentary evidence in establishing the utilization of inputs by the manufacturer. The judgment highlighted the significance of factual findings supported by tangible evidence in resolving disputes related to the admissibility of credit on inputs in excise matters.