2015 (4) TMI 994 - AT - Central Excise

Cenvat Credit - Bogus invoices - Burden of proof - Held that - Assessee is required to find out while taking Cenvat Credit to ensure that the input on which Cenvat Credit is taken, the relevant document is accompanied by them or not. Admittedly, in this case the appellant is able to produce the invoice against which appellant has availed Cenvat Credit and same has been entered in their RG -23 Register. Therefore, the burden cast on the revenue to prove that this is only a paper transaction and goods have not been received by the appellant at all. To ascertain this fact that appellant has not received the goods. The statement of transporter is very much relevant to find out the truth. Moreover, investigation at the end of investigation, manufacturer supplier also reveal the truth whether the manufacture supplier has supplied the goods to the appellant through the registered dealer or not. - appellant has produced invoice on the strength of which they have availed Cenvat Credit and the goods have been entered in their RG -23 register and same has been supported by the weightment slips which were produced by the appellant before the authorities below. When these material evidence are on record then the burden of not receiving the goods by the appellant shifts on the revenue which revenue failed to do so. - Decided in favour of assessee.

Summary

Issues:
Appeal against duty demand, interest, and penalty for alleged Cenvat Credit on paper transactions without receiving goods.

Analysis:

Issue 1: Allegation of Cenvat Credit on Paper Transactions
The appellant appealed against the duty demand, interest, and penalty imposed due to the allegation of taking Cenvat Credit on paper transactions without physically receiving the goods. The investigation revealed discrepancies at M/s. Jai Kara Steel Rolling Mills and M/s. Jyoti Steels, leading to the issuance of a show cause notice to the appellant and M/s. Jyoti Steels. The appellant contended that they received goods from M/s. Jyoti Steels against invoices, paid through cheques, and argued that without investigating the transporter or physically verifying the stock, the demand was unsustainable. Citing relevant legal precedents, the appellant challenged the denial of Cenvat Credit based on paper transactions.

Issue 2: Burden of Proof
The Revenue opposed the appellant's contentions, emphasizing that the first stage dealer issuing the invoice was non-existent, questioning the receipt of goods by the appellant. The Revenue highlighted the lack of cooperation from M/s. Jyoti Steels during the investigation, placing the burden on the appellant to prove physical receipt of goods, which they allegedly failed to do without tangible evidence. Legal cases such as Neelkanth Steel Agro Industries and Sidh Industries were cited to support the Revenue's stance.

Issue 3: Rule 9(3) of Cenvat Credit Rules 2002
The judgment delved into Rule 9(3) of the Cenvat Credit Rules 2002, emphasizing the requirement for the assessee to ensure that goods on which Cenvat Credit is claimed have accompanying relevant documents. The appellant was able to produce invoices entered in their RG-23 Register, shifting the burden to the Revenue to prove the alleged paper transaction. The relevance of transporter statements and investigations at the manufacturer supplier's end was highlighted to ascertain the truth of goods receipt.

Conclusion:
The tribunal found that the charge against the appellant of not receiving goods and engaging in paper transactions was unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief if any. The judgment emphasized the importance of tangible evidence and proper investigation to establish the validity of Cenvat Credit claims and transactions.