2015 (1) TMI 72 - AT - Central Excise

CENVAT Credit - Revenue s allegation was that the said two dealers have issued only cenvatable invoices without the corresponding supply of the goods to the manufacturing units - Held that - all manufacturing units in their statement have accepted to have received the material in question and payments for the same had been made by crossed cheques. There is virtually no evidence of any flow back of money from the dealers to the manufacturers, in which case I agree with the appellate authority that the Revenue s allegation cannot be upheld. - period involved in the present appeal is after 1-4-2000 to July, 2000. The manufacturing units were also receiving the raw material from the said dealer being prior to 1-4-2000, when Section 3A was in operation and no Cenvat credit was availed by the manufacturing units in respect of the material so received by them from the said dealers. As such, the appellate authority has correctly observed that the allegation of the Revenue after 1-4-2000 that they only received cenvatable invoices without corresponding receipt of the inputs is only assumptive. - Revenue has not shown any alternate source of procurement of raw material. Admittedly the manufacturing units have consumed the raw material and have shown the production of their final product, which was cleared on payment of duty. If, according to the Revenue, they have not received the raw material from the said two registered dealers, there is no answer to the question as to from where manufacturing unit have procured the raw material. - Decided against Revenue.

Summary

Issues Involved: Alleged issuance of cenvatable invoices without corresponding supply of goods, failure to create corroborative evidence, reliance on statements of individuals, absence of flow back of money, operation of Section 3A, lack of alternate source of procurement of raw material.

Analysis:
1. Alleged issuance of cenvatable invoices without corresponding supply of goods:
The case involved allegations against two registered dealers for issuing cenvatable invoices without actually supplying goods to manufacturing units. The Revenue initiated proceedings based on documents recovered from the dealers' premises, suggesting sales to parties other than the manufacturing units in question. However, the Commissioner (Appeals) set aside the order, leading to the present appeals.

2. Failure to create corroborative evidence:
The partner of one dealer stated that the rough papers found were for tutoring purposes and not related to business dealings. The Revenue failed to investigate the students mentioned by the partner, leading the Commissioner to accept the statement as factually correct. Similarly, the statement of another individual was discredited as the alleged sale parties denied receiving any material.

3. Reliance on statements of individuals:
The appellate authority scrutinized statements from involved parties. While one statement was accepted due to lack of departmental investigation into the mentioned individuals, another statement was rejected as the alleged buyers denied receiving any material.

4. Absence of flow back of money:
The manufacturing units confirmed receiving material and making payments via crossed cheques. There was no evidence of money flowing back from the dealers to the manufacturers, supporting the rejection of Revenue's allegations by the appellate authority.

5. Operation of Section 3A:
The period under consideration was after 1-4-2000, with manufacturing units receiving raw material before that date when Section 3A was in effect. As no Cenvat credit was claimed for material received before 1-4-2000, the Revenue's claim of only receiving cenvatable invoices post that date was deemed assumptive by the appellate authority.

6. Lack of alternate source of procurement of raw material:
The Commissioner (Appeals) noted that the Revenue failed to identify any other source from which the manufacturing units could have procured raw material. Given that the units utilized the material to produce final products cleared with duty payments, the absence of material receipt from the registered dealers raised questions about the source of procurement.

In conclusion, the Tribunal upheld the Commissioner's decision, rejecting the Revenue's appeals based on the lack of corroborative evidence, absence of money flow back, operation of Section 3A, and the failure to identify an alternate source of raw material procurement.