2018 (2) TMI 615 - AT - Central Excise

CENVAT credit - bogus invoices - goods not received by the principal manufacturers/dealers - Held that - in this case, no investigation was conducted at the end of the respondents to ascertain the fact that they actually received the duty paid goods or not?. As the respondents have received the goods against the invoices which show the particulars as per Rule 9 of the CCR, 2004, therefore, respondents are entitled to avail cenvat credit of duty paid by them. It is not a duty for the respondents to investigate the particulars of manufacturer/supplier to ascertain the fact that manufactured supplier had supplied the goods to the dealers. In those circumstances, the cenvat credit to the respondents cannot be denied. Penalty on the dealer, viz. Shri Kaluram Ramdayal Heda is not imposable. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropped demands and penalties on the grounds of bogus invoices for cenvat credit.

Analysis:
The Revenue appealed against orders dropping demands and penalties based on allegations that a dealer issued bogus invoices to claim inadmissible cenvat credit. The adjudicating authority initially denied cenvat credit, leading to duty demands, interest, and penalties on the respondents. The respondents, relying on a Gujarat High Court decision, approached the Ld. Commissioner (A) who dropped the charges. The Revenue contended that as the first stage dealer did not receive goods, the respondents were not entitled to cenvat credit. However, the respondents argued that they received goods as per invoices, citing the Gujarat High Court's stance on proper investigation. The Tribunal noted that no investigation was conducted at the respondents' end to verify goods receipt. The respondents were found entitled to cenvat credit as they received goods against proper invoices, as per CCR Rule 9, emphasizing that it was not their duty to investigate the manufacturer/supplier details.

The Tribunal referenced the Gujarat High Court's detailed examination in a similar case, emphasizing the need for substantial evidence beyond transporter records to deny cenvat credit. The High Court highlighted discrepancies in the Department's case, indicating that official records confirmed receipt of goods. The Tribunal concluded that penalties on the dealer and respondents were not warranted, aligning with the High Court's decision. Ultimately, the Tribunal upheld the impugned order, dismissing the Revenue's appeals.