2018 (10) TMI 1533 - AT - Central Excise

CENVAT Credit - fake invoices - Cenvatable invoices of non-ferrous materials to the manufacturers without delivery of the goods - Held that - The Department is not supposed to establish a fact with mathematical presumption as has been impressed upon by the adjudicating authority below but simultaneously the onus to falsify the document of the appellant still rests upon the Department and the adjudication cannot be decided merely based on the presumptions - In the given circumstances where the documents as produced by the appellant showing that they have received goods in the factory which were duly accounted in the books of accounts have not been rebutted. There seems no reason for holding that the unaccounted credit has been availed by the appellant. Time limitation - Held that - Once there is no evidence for the alleged availment of irregular credit, per contra the evidence reflects the regular purchase of goods under proper invoices with the payment of appropriate amount of Central Excise Duty, there remains no genuine and legal basis for holding the alleged suppression or mis-representation of the facts on the part of the appellant that too with an intention to evade payment of duty - The show cause notice is therefore held to be barred by time and the penalty imposition based on the said ground is also held not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Alleged fraudulent availment of inadmissible Cenvat Credit based on cenvatable invoices without actual receipt of excisable goods.

Detailed Analysis:

1. Background and Allegations:
The appellant, engaged in manufacturing steel wires, was alleged to have fraudulently availed inadmissible Cenvat Credit without receiving the excisable goods. The investigation revealed a scheme involving passing on inadmissible credit through cenvatable invoices, leading to show cause notices being issued.

2. Confirmation of Demands:
The adjudicating authorities confirmed the demands in both cases, prompting the appeals. The appeals were heard with arguments presented by both parties.

3. Appellant's Defense and Tribunal's Observation:
The appellant argued that a similar issue had been decided in their favor previously by the Tribunal. The Tribunal observed that the show cause notice was a follow-up action from an investigation against trading firms linked to the appellant. However, discrepancies in the evidence and lack of cross-examination raised doubts.

4. Rejection of Appellant's Claim:
The adjudicating authority rejected the appellant's claim based on Rule 7(4) of CCR, 2002, shifting the burden of proving admissibility of Cenvat Credit to the appellant. Despite documentary evidence provided, the authority's reliance on oral statements was deemed insufficient.

5. Absence of Departmental Enquiry:
The Tribunal noted the absence of a Departmental enquiry into the genuineness of the supplier, despite the appellant's regular audits. The appellant's documented receipt of goods and payment of Central Excise Duty were not rebutted, casting doubt on the alleged irregular credit availment.

6. Decision and Ruling:
The Tribunal found no evidence of irregular credit availment by the appellant, concluding that the duty had already been paid. Consequently, the show cause notice was deemed time-barred, and the penalty imposition was held unsustainable. Both Orders-in-Original were set aside, and the appeals were allowed.

This detailed analysis highlights the procedural history, legal arguments, evidentiary considerations, and the Tribunal's reasoning leading to the judgment in favor of the appellant.