2019 (1) TMI 1160 - AT - Central Excise

CENVAT Credit - fake invoices - credit sought to be denied on the ground that the appellant namely M/s Vardhman Strips Pvt Ltd Unit-II has received only invoices and not the goods as per the investigation conducted by DGCEI in the case of one Sh. Amit Gupta - Held that - In this case, Sh. Amit Gupta has issued the invoices to M/s Godawari Enterprises and M/s North Star Industries Pvt Ltd, who further issued the invoices to the appellant, but these suppliers in their statements have stated that they have supplied the goods along with invoices. In these circumstances, without investigating the matter along with the transporters, whether they have supplied the goods to the appellant M/s Vardhman Strips Pvt Ltd, the department cannot deny the Cenvat credit. Admittedly, there is no discrepancy was found in the invoices issued to M/s Vardhman Strips Pvt Ltd. In these circumstances, the Cenvat credit cannot be denied without any contrary evidence on record that the goods have not received by M/s Vardhman Strips Pvt Ltd. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit based on investigation findings.

Analysis:
The appeal involved a case where the appellant, M/s Vardhman Strips Pvt Ltd Unit-II, was denied Cenvat credit based on the investigation conducted by DGCEI against a party issuing invoices without supplying goods. The investigation revealed that the appellant received only invoices without the accompanying goods, leading to the denial of Cenvat credit and imposition of penalties. However, the appellant argued that they purchased goods from other suppliers, M/s Godawari Enterprises and M/s North Star Industries Pvt Ltd, who confirmed supplying goods along with invoices. The appellant maintained that all payments were made through accounted cheques, and VAT on goods was paid and used in manufacturing final products. The appellant contended that since there was no discrepancy in the invoices and goods were received, Cenvat credit should not be denied. The appellant cited relevant tribunal decisions to support their argument.

The department argued that the appellant admitted to wrongful availment of Cenvat credit by paying a sum of ?2 lakhs, leading to the confirmation of the demand based on the admission. However, upon hearing both parties and considering the submissions, the tribunal found that the sole basis for denying Cenvat credit was the investigation against the party issuing invoices without goods. The tribunal noted that the suppliers of the appellant confirmed supplying goods along with invoices, and there was no discrepancy found in the invoices received by the appellant. Without investigating the transporters supplying goods to the appellant, the department could not deny Cenvat credit. The tribunal emphasized that the appellant, as a bona fide purchaser, was required to ensure duty payment on goods received. Therefore, without evidence that goods were not received, the tribunal held that the Cenvat credit was taken correctly by the appellant. The tribunal also referenced similar decisions arising from the same investigation to support its conclusion and set aside the impugned order, allowing the appeals with consequential relief.

In conclusion, the tribunal ruled in favor of the appellant, M/s Vardhman Strips Pvt Ltd Unit-II, holding that they correctly availed Cenvat credit, and no penalties were imposable. The tribunal emphasized the importance of investigating the entire supply chain before denying Cenvat credit based on invoice discrepancies.