2017 (3) TMI 288 - AT - Central Excise

CENVAT credit - registered dealer from whom the goods have been procured by the appellants found to be non-existent - Held that - no investigation has been conducted at the end of the appellants to ascertain they have received the goods or not - No cross examination of the registered dealer was granted to the appellants to reveal the truth - CENVAT Credit cannot be denied to the appellants on the basis of deficient investigation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against orders demanding duty, interest, and penalty by denying Cenvat Credit on input procured from a registered dealer.

Analysis:
The appellants appealed against orders demanding duty, interest, and penalty by denying Cenvat Credit on input procured from a registered dealer. The case involved the appellants procuring pig iron from a registered dealer, who was later alleged to be bogus after an investigation. The investigation led to a show cause notice being issued to the appellants to deny the Cenvat Credit availed on the strength of invoices issued by the dealer. The appellants argued that they had received the goods, used them in manufacturing their final product, and had paid for them through legitimate means. They contended that the denial of Cenvat Credit based on the dealer's alleged non-existence was unjustified since no investigation was conducted at their end or at the end of the manufacturer suppliers or transporters. The appellants highlighted that they had followed proper procedures and that the dealer's registration was valid at the time of procurement. They emphasized the lack of cross-examination of the dealer to ascertain the truth.

The Department sought to deny Cenvat Credit to the appellants based on the registered dealer being non-existent, without proving that the appellants did not receive the goods. The appellate authority noted that no investigation was conducted at the appellants' end to verify the receipt of goods. Additionally, there was no scrutiny of the manufacturer suppliers or transporters, and no cross-examination of the dealer was allowed to establish the facts. Given the deficient investigation and lack of evidence to support the denial of Cenvat Credit, the appellate authority set aside the impugned orders and allowed the appeals, providing consequential relief.

In conclusion, the judgment favored the appellants, emphasizing the importance of thorough investigation and evidence before denying Cenvat Credit. The decision highlighted the need for proper scrutiny and cross-examination to establish facts and ensure fair treatment in such cases.