2019 (1) TMI 1159 - AT - Central Excise

CENVAT Credit - fake invoices - it was alleged that respondents were received only the cevatable invoices without receiving the goods in question - allegation is based on that the statements of certain drivers/transporter - Held that - The said statements of drivers have been controverted by the respondents by producing various vouchers which certified that the respondents have received the inputs but in specific instances like in the case of truck no. HR-38N-1285 and HR- 38M-2282, the vehicles are stated to refrigerate van - Admittedly, the refrigerated van cannot transport the goods i.e. plastic mould to the respondents; therefore, the said statement of driver is admissible by holding that the Cenvat credit of invoice bearing vehicle no. HR-38N- 1285 and HR-38M-2282 is denied in the case of M/s Novice Polymers and M/s Airvision India Pvt Ltd respectively - CENVAT Credit rightly denied. In the case of vehicle no. RJ14-1G-7077, there is categorical statement of the owner of the vehicle, that vehicle was carrying the goods from Yamuna Nagar to Jaipur through Harsh Roadlines, Yamuna Nagar who has brought GR issued by Harsh Roadlines as an evidence for movement of the vehicle. The said GR has not been controverted by the respondents with any tangible evidence - credit rightly denied. In the case of vehicle no. DL-1M-1360, the vehicle is a dumper which can only be used for lifting debris. The statement of Sh. Jadish Chand has been taken on records, therefore, the statement of Sh. Jagdish Chand, the owner of Vehicle No. DL1M- 1360 is admissible evidence consequently, the invoices bearing vehicle no. DL-1M-1360, the Cenvat credit is not admissible - credit rightly denied. Penalty on M/s DR Polymers under Rule 26 of the Central Excise Rules, 2002 - Held that - M/s DR Polymers found to be involved for issuing the impugned invoices. However, M/s DR Polymers is a company and having no knowledge or benefit arriving out of the activity - the penalty is not imposable on a juristic person under Rule 26 of the Central Excise Rules, 2002. Therefore, penalty on M/s DR Polymers is not imposable. CENVAT credit rightly denied - penalty set aside - appeal allowed in part.

Summary

Issues:
Revenue's appeal against setting aside demand confirmed by adjudication order.

Analysis:
The case involves a dispute where the respondents, manufacturers of plastic moulds, were availing Cenvat credit on inputs. Following a search in their factory premises, it was alleged that they had received only cenvatable invoices without receiving the actual goods, leading to show cause notices being issued to deny Cenvat credit, demand duty with interest, and impose penalties. The adjudicating authority upheld the denial of Cenvat credit and confirmed the duty demand and penalties. The respondents appealed to the Ld. Commissioner (Appeals), who set aside the adjudication orders. The Revenue then appealed to CESTAT Chandigarh.

The Revenue contended that the Ld. Commissioner (Appeals) overlooked statements of drivers indicating that goods were not transported to the respondents, thus justifying denial of Cenvat credit. On the other hand, the respondents argued that the drivers admitted to transporting goods and providing payment vouchers as evidence, supporting their claim for Cenvat credit.

After hearing both parties, CESTAT Chandigarh found that the Revenue's case rested on the claim that respondents did not receive goods but only invoices, based on statements of certain drivers. However, the respondents presented vouchers certifying receipt of inputs, countering the drivers' statements. In specific instances involving refrigerated vans unsuitable for transporting goods, Cenvat credit was denied on particular invoices. Additionally, in cases where owners provided evidence of goods movement, Cenvat credit was also denied.

Consequently, CESTAT Chandigarh upheld the denial of Cenvat credit on specific invoices, confirming duty demand, interest, and penalties on the respondents. However, regarding M/s DR Polymers, found to be involved in issuing invoices, the penalty was not imposed as the company lacked knowledge or benefit from the activity, in line with a precedent. Therefore, the penalty on M/s DR Polymers was set aside.

In conclusion, CESTAT Chandigarh ruled to deny Cenvat credit on certain invoices, confirm duty demand, interest, and penalties on the respondents, while setting aside the penalty on M/s DR Polymers. The appeals were disposed of accordingly.