2014 (2) TMI 452 - AT - Central Excise

Availment of CENVAT Credit - Bogus transactions or not - registered dealer - Held that - Revenue has not made any investigations with the transporter so as to arrive at the correct factual position as to whether the inputs were supplied or not. The revenue has now placed on record a letter written by the Assistant Commissioner wherein certain investigations stand conducted at the appellate stage, recording the statement of excessive pressure of owner of the vehicle laying down that such vehicles was not used for transportation of the goods. However, I find that in the said statement, which stand produced before me, the deponent has clearly deposed that said truck in question remained with his brother only and was driven by the drivers employed by them as also by his brother. He has nowhere disclosed that he was aware of movement of said truck. It is not understood why such an inquiries from the transporter were not made during the relevant period. In any case, the Revenue has not produced any evidence to reflect that the appellant has procured the raw material from some other alternative sources. Admittedly the inputs stand reflected in the RG I register and stand used by the appellant in the manufacture of their final product, which stand cleared on payment of duty. In the absence of any evidence to show that such raw material was procured from other sources. The Revenue s case that no inputs were received by the appellant cannot be held sustainable. Following decision of Talson Mill Store vs. CCE & ST, Ludhiana 2014 (2) TMI 443 - CESTAT NEW DELHI wherein it was held that relieance on the sole statement of representative of M/s. Sidh Balak Enterprises cannot be appreciated- Decided in favour of assessee.

Summary

Issues:
Cenvat credit availed on the basis of invoices issued by a registered dealer; Entitlement of the appellant to avail credit; Compliance with Rule 7 of Cenvat credit Rules; Verification of identity and address of the supplier; Denial of credit based on subsequent investigations; Payment for supplies made through cheque; Tribunal precedents on procurement of raw materials; Investigation regarding receipt of inputs; Reliance on transporter's statement; Procurement of raw material from alternative sources; Sustainable case for denial of credit; Tribunal's decision in a similar case.

Analysis:
The judgment revolves around the dispute concerning the Cenvat credit availed by the appellant based on invoices from a registered dealer. The issue at hand is whether the appellant is entitled to claim the credit, considering allegations that the dealer was not actually supplying goods. The judgment emphasizes compliance with Rule 7 of Cenvat credit Rules, which requires the assessee to ensure the genuineness of the supplier by taking reasonable steps. It is noted that the manufacturer had verified the identity and address of the dealer as per the excise registration number, fulfilling the requirement.

The investigation revealed that the dealer had changed godown numbers, but during the relevant period, they were registered at the given address. The invoices were issued by the dealer, and the appellant reflected the credit in their returns without objection from the department. The judgment cites various precedents where denial of credit based on similar circumstances was not upheld, emphasizing that the buyer cannot be expected to verify beyond the registered dealer's documents.

Regarding the investigation into the receipt of inputs, the Revenue failed to provide evidence that the raw material was procured from alternative sources. The appellant's statements indicated receipt of inputs along with invoices, and the absence of evidence to the contrary led to the unsustainable nature of the Revenue's case for denying credit. The judgment also refers to a Tribunal decision in a similar case where reliance on the dealer's representative's statement alone was deemed insufficient, ultimately leading to the appeal being allowed in favor of the appellant based on established precedents and factual circumstances.

In conclusion, the judgment highlights the importance of following legal provisions, verifying supplier details, and providing substantial evidence before denying credit to an appellant. The decision ultimately favors the appellant based on the established legal principles and precedents, setting aside the impugned order and granting consequential relief.