2017 (4) TMI 422 - AT - Central Excise

CENVAT credit - duty paying documents - denial on the ground that M/s. AMC had altered the description of goods from Brass Circles and Brass Strips to Brass Sheets on its invoices and thus, had passed on inadmissible cenvat credit to the appellant - Held that - no proper investigation was conducted in the factory of the appellant to ascertain whether the disputed goods were received and utilized for the intended purpose. Rather, the statement recorded from the Director of the appellant company revels that the goods namely, Brass Sheets received under the cover of invoices were used/utilized for manufacture of the final product. No where in this statement, it has been mentioned that the appellant had not received Brass Sheets under the cover of Central Excise invoices from the register dealers M/s. AMC. Thus, in absence of any specific investigation to show non-receipt of goods by the appellant, cenvat demand confirmed against the appellant cannot be sustained - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Appeal against order disallowing cenvat credit and imposing penalty under Central Excise Act.
- Allegation of altering goods description to avail inadmissible credit.
- Lack of proper investigation to ascertain receipt and utilization of disputed goods.
- Discrepancies in findings between the Commissioner (Appeals) and the Tribunal in related cases.

Analysis:
1. The appeal was filed against an order disallowing cenvat credit and imposing a penalty under the Central Excise Act. The appellant, engaged in manufacturing zips and related products, was alleged to have received inadmissible credit by altering the description of goods in invoices. The Commissioner (Appeals) upheld the demand based on this allegation.

2. The appellant contended that they had received the goods in question, Brass Sheets, from a registered dealer and utilized them in their manufacturing process. Referring to a statement by the Director of the company confirming the receipt and use of the goods, the appellant argued that proper procedures were followed. Additionally, proceedings against the dealer and other buyers were settled favorably by the Tribunal in a related case.

3. The lack of a thorough investigation to confirm the receipt and utilization of the disputed goods by the appellant was highlighted. The Tribunal noted that the statement from the Director of the company indicated the receipt and use of Brass Sheets for manufacturing, without any evidence of non-receipt. This lack of specific investigation to prove non-receipt undermined the basis for the cenvat demand against the appellant.

4. Discrepancies in findings between the Commissioner (Appeals) and the Tribunal in related cases were noted. The Tribunal referenced a previous order where demands against other manufacturers and buyers were set aside due to a lack of corroborative evidence showing non-receipt of goods covered by invoices. This inconsistency in findings further supported the decision to set aside the impugned order against the appellant.

5. Ultimately, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal in favor of the appellant. The lack of conclusive evidence of non-receipt of goods, coupled with discrepancies in findings in related cases, led to the decision to rule in favor of the appellant.

Conclusion:
The judgment by the Tribunal overturned the order disallowing cenvat credit and imposing a penalty on the appellant, emphasizing the importance of thorough investigations and corroborative evidence in such cases. The decision highlighted the need for clear proof of non-receipt of goods to sustain demands against manufacturers, ultimately ruling in favor of the appellant based on the lack of such evidence and inconsistencies in related case findings.