2019 (4) TMI 471 - AT - Central Excise

CENVAT Credit - fake invoices - credit availed without actual receipt of goods - Held that - The documentary evidence on record in the form of the current account books statements, shows that zinc ingots were duly received into appellants factory as the receipt has duly been recorded in the said statement - also the statement of Shri Amit Gupta has not been fully considered by the adjudicating authority. The subsequent part thereof reveals that all the Cheques drawn in the name of supplier of inputs have been en-cashed by the supplier and thus the fact that the financial transaction stands duly completed/ has miserably been ignored by the adjudicating authority below. The Department has failed to produce any other document to falsify the said GR. No doubt, the Department is not supposed to establish a fact with mathematical precision, 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. It is also apparent from the record that appellants have purchased the goods from the registered dealer. When it is so, then it is the liability of the Department to make an enquiry about the genuineness of the supplier. No such enquiry is apparent on record - Once there is no evidence for the alleged availment of irregular credit, and for cenvatable invoice allegedly being bogus, 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 misrepresentation of the facts on the part of the appellant that too with an intention to evade payment of duty. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Alleged fraudulent availing of inadmissible Cenvat Credit without actual receipt of excisable goods
- Confirmation of demands by adjudicating authorities
- Appeal based on previous Tribunal decision in favor of the appellant
- Dispute regarding evidence and documentation presented
- Allegations of contravention of Cenvat Credit Rules
- Lack of cross-examination of key witness
- Rejection of appellant's claim based on Rule 7(4) of CCR, 2002
- Failure of Department to conduct an enquiry into the genuineness of the supplier
- Lack of evidence for alleged irregular credit availment
- Invocation of extended period of limitation
- Penalty imposition and time limitation issues

Detailed Analysis:

1. The judgment pertains to two appeals involving the alleged fraudulent availing of inadmissible Cenvat Credit without actual receipt of excisable goods by the appellant, a manufacturer of CI Casting. The investigation revealed the passing on of inadmissible credit on non-ferrous materials through un-genuine invoices, leading to the issuance of show cause notices.

2. The adjudicating authorities confirmed the demands, prompting the appeals. The appellant argued for a favorable decision based on a previous Tribunal ruling in a similar case. The Revenue countered, emphasizing the evidence of the appellant's contravention of Cenvat Credit Rules.

3. The presiding member noted that the show cause notice stemmed from an investigation against trading firms linked to a third party, highlighting discrepancies in witness statements and the lack of cross-examination. The documentary evidence, including account statements, indicated the receipt of goods by the appellant.

4. The adjudicating authority's rejection of the appellant's claim based on Rule 7(4) of CCR, 2002 was deemed flawed due to reliance on oral statements over documentary evidence. The Department's failure to verify the supplier's genuineness and the absence of evidence for irregular credit availment were highlighted.

5. The judgment emphasized that the appellant had purchased goods from a registered dealer, with proper documentation and payment of Central Excise Duty. The lack of evidence for suppression or misrepresentation, coupled with the payment of due duty, led to the dismissal of penalty imposition and the invocation of the extended period of limitation.

6. Consequently, both Orders-in-Original were set aside, and the appeals were allowed based on the lack of genuine legal basis for the alleged misconduct and the time-barred nature of the show cause notices.