2019 (4) TMI 1062 - AT - Central Excise

CENVAT Credit - fake invoices - fraudulent paper transactions without physically receiving the corresponding goods - HELD THAT - No evidence whatsoever has been produced by the Revenue to substantiate the fact that the respondent assessee had procured the impugned goods from elsewhere after getting possession of the relevant Central Excise Invoices issued in their favour from M/s Shree Ganesh Forging Company. Further, nothing has been brought on record to show any manner in which the assessee had accounted for the quantum of raw materials for finished goods in their stock if the impugned goods/inputs had not been received by them during the material period, as alleged by the Department. In the absence of any credible corroborative evidence, the allegation of non-receipt of inputs/goods by the assessee is not maintainable - The credit cannot be denied merely on the ground of suspicion being not bagged by credible corroborative evidence. Tribunal in the case of M/S. DHAKAD METAL CORPORATION AND M/S. BHAVNA METAL COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., DAMAN 2015 (8) TMI 146 - CESTAT AHMEDABAD , where it was held that It is beyond comprehension that a man will get invoices without inputs and separately acquire inputs clandestinely from other sources to manufacture his goods. There is no whisper about M/s. Dhakad Metal Corporation to be indulging in clandestine removal of finished goods in these proceedings. It is now well settled legal position that a case can not be established on the basis of few confessional statements without other corroborative evidences like shortage of raw materials, cash transactions, alternative procurement of raw materials. Appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against Orders-in-Appeal, Allegation of fraudulent transactions, Non-receipt of goods, Cenvat credit denial, Lack of evidence, Cross-examination request, Tribunal decisions reference.

Analysis:
1. Allegation of Fraudulent Transactions: The case involved the Revenue alleging that the respondent assessee had taken credit through fraudulent paper transactions without physically receiving the corresponding goods. The Adjudicating authority confirmed the demand and penalties, which were challenged in appeals.

2. Non-Receipt of Goods: The Revenue claimed that the respondent had not received the impugned goods from the supplier, and the confirmation of demand was based on discrepancies in excise records and invoices. The respondent argued that no evidence was presented to substantiate the non-receipt allegation.

3. Cenvat Credit Denial: The Tribunal noted that there was no evidence to prove that the respondent had not received the goods for which cenvat credit was claimed. The absence of credible corroborative evidence led to the dismissal of the allegation of non-receipt of inputs by the assessee.

4. Lack of Evidence and Cross-Examination: The Tribunal observed that the Revenue failed to produce evidence to support the non-receipt claim. The respondent's request for cross-examination was not granted, and the Tribunal emphasized the importance of corroborative evidence in such cases.

5. Tribunal Decisions Reference: The respondent relied on Tribunal decisions in similar cases, emphasizing the need for proper evidence and cross-examination to establish allegations. The Tribunal cited specific cases where lack of corroborative evidence led to the dismissal of demands and penalties.

6. Decision and Dismissal of Appeals: After considering the arguments and precedents, the Tribunal found no reason to interfere with the impugned order. The appeals filed by the Revenue were dismissed, and the cross objection was disposed of accordingly. The Tribunal upheld the order in favor of the respondent assessee based on the lack of substantial evidence supporting the Revenue's claims.