2017 (1) TMI 361 - AT - Central Excise

CENVAT credit - forged documents - denial on the ground that appellant has taken Cenvat credit on paper transactions and has not physically received the goods - Held that - As per Rule 9(3) of the Cenvat Credit Rules, 2002, the 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. The charge against the appellant that they have not received goods and it was only the paper transaction is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Duty demand on Cenvat credit for paper transactions without physical receipt of goods.

Analysis:

1. Background: The appellant appealed against an order confirming duty demand, interest, and penalty for allegedly taking Cenvat credit on paper transactions without physically receiving the goods.

2. Appellant's Contentions: The appellant, a manufacturer buyer, argued that they received goods from a dealer against duty paid invoices, disputing the non-existence of the dealer. They emphasized paying by cheque and cited legal precedents to support their case.

3. Revenue's Arguments: The Revenue contended that the first stage dealer was non-existent, presenting evidence that the dealer lacked a godown and was uncooperative during investigations. They highlighted the burden on the appellant to prove physical receipt of goods.

4. Judgment: The Tribunal found that the investigation did not establish the non-existence of the manufacturer supplier or the failure of goods' transport to the appellant. The denial of Cenvat credit was deemed unsustainable due to lack of conclusive evidence against the appellant.

5. Rule Interpretation: Rule 9(3) of the Cenvat Credit Rules, 2002 was referenced, emphasizing the need for the assessee to ensure duty payment on goods for Cenvat credit. The appellant's production of invoices and RG-23 Register entries shifted the burden of proof to the Revenue, requiring evidence to refute goods receipt.

6. Legal Precedents: The Tribunal distinguished cited case laws, noting their inapplicability to the present case where the appellant was not a registered dealer but a manufacturer/buyer. The lack of evidence disproving goods receipt by the appellant led to the unsustainability of the charge.

7. Conclusion: The impugned order was set aside, and the appeal was allowed, granting consequential relief if applicable. The judgment highlighted the necessity for conclusive evidence to support allegations of non-receipt of goods in cases involving Cenvat credit based on paper transactions.

Note: The judgment underscores the importance of thorough investigations and evidence in disputes related to Cenvat credit and the physical receipt of goods to ensure fair adjudication and compliance with relevant rules and regulations.