2015 (6) TMI 113 - AT - Central Excise

Denial of CENVAT Credit - Bogus invoices - Non receipt of goods - Held that - Appellants availed CENVAT credit on the strength of 18 invoices issued by the manufacturers of articles of Copper. The suppliers stated that the vehicles were arranged by the appellant and they have not verified the vehicles numbers at the time of dispatch. They further stated that they were unable to produce the Lorry Receipts in the instant case as the appellant had arranged for the transportation of the goods. It is seen from the adjudication order that verification report from respective jurisdictional Central Excise authorities were received stating that invoices referred for verification were issued by the respective supplier on payment of duty mentioned therein. Thus, there is no dispute that the duty paying documents are genuine. It is also revealed from the records that the suppliers supplied the goods and the appellant arranged the transportation. Impugned order that the Commissioner (Appeals) observed that the appellant had not produced the Lorry Receipts of the same and the evidence of payments made to the transporters. It is noticed that the appellants produced the Cash Payment Vouchers of transportation of goods before the Tribunal. On perusal of the said evidence, I find that some cash payment vouchers were signed on proper Revenue stamp and also signed by other persons of the appellant Company. The learned Authorised Representative for the Revenue submitted that these documents were not placed before the lower authorities. In my considered view, the appellant should be given an opportunity to produce these evidences before the adjudicating authority, in the interest of justice. - Decided in favour of assessee.

Summary

Issues:
- Availment of CENVAT credit without actual receipt of inputs
- Imposition of penalty on appellants
- Dispute regarding transportation of goods based on RTO report
- Failure to produce Lorry Receipts/Transport payment vouchers
- Appellants' contention on genuineness of invoices and payment made by cheques

Analysis:

Issue 1: Availment of CENVAT credit without actual receipt of inputs
The case involved the appellant, a copper manufacturer, availing CENVAT credit without actual receipt of inputs. The Central Excise officers seized records and issued a Show Cause Notice for wrongly availed credit. The adjudicating authority confirmed the demand and imposed penalties on the appellants, which were upheld by the Commissioner (Appeals). The appellant argued that they received materials with duty-paid invoices, recorded in CENVAT records, and used in manufacturing final products. The Tribunal found that duty-paying documents were genuine, but a dispute arose due to an RTO report questioning the capacity of vehicles mentioned in invoices to transport goods.

Issue 2: Imposition of penalty on appellants
Penalties were imposed on the appellants, including partners and manager, for availing CENVAT credit without actual receipt of inputs. The Tribunal considered the genuineness of invoices, the appellant's payment by cheques, and the lack of objection from the Department regarding input receipt and usage in manufacturing. The Tribunal noted the need for the appellants to provide additional evidence, such as Lorry Receipts and Transport payment vouchers, to establish the receipt of goods and eligibility for credit.

Issue 3: Dispute regarding transportation of goods based on RTO report
The dispute centered around an RTO report questioning the vehicles' capacity to transport goods as per the invoices. The Tribunal referred to a High Court case where credit denial based solely on an RTO report was deemed insufficient. The appellant argued that transporters might provide incorrect registration numbers for personal gain, emphasizing the need for a thorough investigation beyond the RTO report.

Issue 4: Failure to produce Lorry Receipts/Transport payment vouchers
The appellants failed to produce Lorry Receipts and Transport payment vouchers before lower authorities, leading to challenges in establishing the receipt of goods. The Tribunal acknowledged the production of Cash Payment Vouchers during the appeal, signed and stamped, suggesting a need for further verification and consideration by the adjudicating authority.

Issue 5: Appellants' contention on genuineness of invoices and payment made by cheques
The appellants contended that the invoices were genuine, supported by payments made through cheques and recorded in statutory records. The Tribunal emphasized the importance of verifying the payment vouchers and other evidence to ensure compliance with the law. The matter was remanded to the adjudicating authority for a thorough review, emphasizing the need for a fair hearing and consideration of all evidence before passing a new order.