2017 (1) TMI 363 - AT - Central Excise

CENVAT credit - fake invoices - non-existent dealers - Held that - No investigation was conducted at the end of manufacturer supplier/transporter and the available evidences establish that the assessee has received the goods in the absence of any contrary evidence. On record, the cenvat credit cannot be denied to the assessee merely, on the ground that at the time of investigation, the dealer was non-existent. In fact when the goods were procured by the assessee, the dealer was registered with the department. CENVAT credit allowed - appeal dismissed - decided in favor of assessee.

Summary

Issues:
Denial of cenvat credit on invoices due to non-existent dealer/supplier and lack of storage capacity.

Analysis:
The case involves the denial of cenvat credit to the assessee based on the investigation against the dealer/supplier, M/s Sidh Balak Enterprises, who was found to be non-existent and lacking storage capacity. The adjudicating authority confirmed the demand for denial of cenvat credit, leading to an appeal by the assessee before the Ld. Commissioner (A). The Ld. Commissioner (A) granted benefit on invoices issued the same day as the manufacturer supplier but denied credit where there was a gap of a week to ten days. The key argument by the assessee's counsel was that the revenue failed to verify the dealer's registration status and premises, emphasizing that payments were made through cheques and goods duly recorded. Reference was made to a tribunal decision where lack of corroborative evidence led to credit allowance. On the contrary, the Ld. AR argued that since the dealer was non-existent and registration cancelled, cenvat credit should be denied, citing a relevant tribunal decision regarding transit sales and invoice requirements.

The tribunal considered the facts of the case and compared them to a similar case involving M/s Accurate Auto Product Ltd. The tribunal noted the absence of evidence regarding the receipt of goods by the appellants and the lack of storage facilities by the dealer/supplier. The tribunal differentiated the current case from the precedent cited by the Ld. AR due to the appellant's storage capacity and manufacturing status. It was highlighted that no investigation was conducted at the end of the manufacturer supplier/transporter, and the lack of such evidence led to the denial of cenvat credit being deemed incorrect. Relying on the decision of M/s Accurate Auto Product Pvt. Ltd., the tribunal concluded that the denial of cenvat credit solely based on the non-existence of the dealer during investigation was not justified, especially when the dealer was registered at the time of procurement by the assessee. Consequently, the tribunal dismissed the revenue's appeal, affirming the correctness of the cenvat credit taken by the assessee.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the tribunal's examination of the facts vis-a-vis relevant precedents, and the ultimate decision regarding the denial of cenvat credit based on the non-existence of the dealer/supplier and lack of storage capacity.