2018 (10) TMI 637 - AT - Central Excise

CENVATCredit - fake invoices - no actual supply of goods - case of Revenue is that appellant could not prove the transportation of the goods to the appellant - Held that - The entire case is based on one statement of transporter, that too in respect of one consignment between the manufacturer M/s Tribhuvan Industries Pvt. Ltd. and M/s Good Luck Empire - As regard statement of the director of the appellant s company, there is no admission regarding wrong availment of credit without receipt of the goods - There is no investigation carried out by the investigating agency, on the further transportation of goods from the first stage dealer to the appellant. Regarding consignment note since the service tax on transportation was paid by the appellant that itself establish the transportation of the goods. Merely because consignment note was not produced, it cannot be said that the goods were not transported. Since the entire case is on the basis of one transaction between the manufacturer and the first stage dealer which is not relevant with the appellant, any evidence of that transaction cannot be used against the appellant, particularly, when no tangible evidence was unearthed in the transaction between the dealer M/s Good Luck Empire and the appellant - The payment for the supplies was made through cheques which were recorded in the ledger of both M/s Good Luck Empire and the appellant. The receipts of inputs were entered in the Cenvat registers such as RG23A Part I and Part II. Despite the visit of the officers to the appellant s factory, no discrepancy was noticed. There is no reason to deny the Cenvat Credit. The only the evidence which is not related to the appellant is the statement of the transporter which is not respect of the transportation of the goods to the appellant cannot be used against the appellant. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Disallowance of CENVAT credit based on alleged non-transportation of goods from manufacturer to first stage dealer.
2. Appeal against Commissioner (Appeals) decision disallowing credit in respect of 7 consignments.

Analysis:
1. The case revolved around the disallowance of CENVAT credit amounting to ?5,28,118/- by the department based on the alleged non-transportation of goods from manufacturer to the first stage dealer. The appellant availed credit on 07 invoices issued by M/s Good Luck Empire, a first stage dealer, who purchased goods from M/s Tribhuvan Industries Pvt. Ltd. The department's contention was that since one vehicle purportedly used for transportation was not used as per the transporter's statement, there was no supply of goods from the first stage dealer to the appellant. The Commissioner (Appeals) upheld this disallowance, leading to the present appeal by the appellant's company and its director.

2. The appellant, represented by Shri Willingdon Christian, argued that discrepancies were found only in one out of the 7 consignments, emphasizing that all other consignments showed no issues. Various pieces of evidence were presented to support the receipt and utilization of inputs in the manufacturing process, including the absence of discrepancies during a raid, proper entry of inputs in registers, and payment evidence to M/s Good Luck. The department's conclusions were challenged, highlighting the lack of discrepancies in most consignments and the absence of inquiries with relevant parties like transporters and manufacturers.

3. The appellant's reliance on previous judgments supported their argument that once they purchased inputs from a registered dealer, their responsibility regarding credit availed was fulfilled. Additionally, the appellant contended that the Show Cause Notice was time-barred, and they were not involved in any potential fraud by the manufacturer. The judgment emphasized the lack of tangible evidence linking the alleged non-transportation to the appellant, noting the exculpatory nature of recorded statements and proper payment records. Ultimately, the tribunal found no reason to deny the CENVAT credit and set aside the impugned order, allowing the appeal.

In conclusion, the judgment focused on the lack of substantial evidence linking the alleged non-transportation of goods to the appellant, emphasizing proper record-keeping, payment evidence, and absence of discrepancies in most consignments. The tribunal's decision to set aside the disallowance of CENVAT credit was based on the lack of conclusive evidence against the appellant, highlighting the importance of factual evidence in such cases.