2013 (7) TMI 561 - AT - Central Excise

Cenvat Credit - input received from First Stage dealer - burden on the manufacturer to check the particulars as mentioned in the invoice - Rule 9(5) of CCR - M/s. M K Steels raised dealers invoice, giving all the particulars required to be given under law in the invoice supplied to the respondents - Held that - The inputs were used by them in the manufacture of their final product, which were cleared by them on payment of duty. It is also a part of the record that the goods traveled from the dealer premises to the respondents premises under the cover of form 31 of UP Trade Tax department. This fact is sufficient to prove the physical entries of the inputs in the assessee s premises. Further, the ledger account and RG 23 A records maintained by the assessee also proves the receipt of the goods It is sufficient if the assessee buys the goods from first stage dealer whose status he has checked and verified - Denial of credit to the respondent manufacturing unit on the ground that first stage dealer has fraudulently received the goods is neither proper nor justified Decided against the Revenue.

Summary

Issues:
Denial of Cenvat credit and imposition of penalty based on alleged fake invoices.

Analysis:
The judgment pertains to three appeals filed by the revenue challenging the Commissioner (Appeals) order that set aside the denial of Cenvat credit and penalties imposed on a company and its directors. The dispute arose from the procurement of inputs by the company from a registered dealer, who was later found to be sourcing goods from a non-existent entity, leading to allegations of fake invoices.

The Commissioner (Appeals) found the company eligible for Cenvat credit as they had taken due precautions and followed the necessary rules in procuring the raw materials. The company had placed orders through a broker, received the inputs, and used them in manufacturing final products, duly clearing them with duty payment. The appellate authority emphasized that as long as the transaction's bonafide nature is not doubted, credit should not be denied, citing relevant legal provisions and circulars.

The judgment highlighted that the company had received proper invoices from the dealer, recorded the inputs, physically received the goods, and made payments through cheques. The maintenance of ledger accounts and other records further substantiated the receipt and utilization of the inputs in the manufacturing process. The court also emphasized that it is impractical for an assessee to verify all records of the first-stage dealer beyond checking their registration status, which was done in this case.

The court, in line with the Commissioner (Appeals) findings, rejected all appeals filed by the Revenue, emphasizing that denial of credit based on the first-stage dealer's alleged fraudulent activities was neither proper nor justified. The judgment was pronounced on 01.07.2013 by Ms. Archana Wadhwa, J., and concluded the matter in favor of the company and its directors.