2017 (6) TMI 109 - HC - Central Excise

CENVAT credit - fake invoices - denial on the ground that the inputs not received in the factory and not utilized in the manufacture of final product - Held that - the matter is squarely covered by the judgment of this Court in Central Excise, Customs & Service Tax Vs. Juhi Alloys 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT , where it was held that The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer - appeal dismissed - decided against Revenue.

Summary

Issues:
Admissibility of Cenvat Credit on inputs not received in the factory and not utilized in the final product based on fake invoices. Correctness of Tribunal's decision in distinguishing the High Court order regarding eligibility of Cenvat Credit on inputs not received in the factory. Validity of CESTAT's dismissal of the Department's appeal.

Analysis:
The appellant raised three substantial questions of law regarding the eligibility of Cenvat Credit based on inputs not received in the factory and not utilized in the final product, particularly on the basis of fake invoices. The Tribunal and Commissioner (Appeals) had already recorded concurrent findings of facts, confirming that the goods covered under disputed invoices were indeed received by the appellant. The Tribunal emphasized that the Revenue failed to provide tangible evidence to prove non-receipt of goods, leading to the dismissal of the Department's appeal. The Tribunal's decision aligned with the judgment of the Allahabad High Court in a similar case, emphasizing that once goods are received under duty paid documents for intended use, the genuineness of documents cannot be questioned by the Department.

The Tribunal's analysis highlighted that the appellant had taken reasonable steps to ensure the authenticity of the inputs for which Cenvat credit was claimed. The appellant was considered a bona fide purchaser who made payments including the duty element by cheque. The statutory records maintained by the appellant confirmed the receipt of goods, supported by Form 31 issued by the Trade Tax Department. The Tribunal's decision was consistent with the Jharkhand High Court judgment, emphasizing that buyers of inputs are entitled to assume that excise duty has been paid by the supplier based on invoices, without the obligation to verify the supplier's accounts or Central Excise department. The Tribunal concluded that the dispute was covered by the High Court's previous judgment, indicating no substantial question of law in the appeal.

Ultimately, the High Court dismissed the appeal, upholding the Tribunal's decision based on the findings of facts and the legal principles established in previous judgments. The Court found no merit in challenging the eligibility of Cenvat Credit based on the facts and legal precedents presented in the case, leading to the rejection of the appeal.