2020 (3) TMI 910 - AT - Central Excise

CENVAT Credit - duty paying invoices - It is the case of the Revenue that no material was received by the appellant against these invoices and only invoices were received and CENVAT Credit has been taken - HELD THAT - As far as the invoices issued by M/s Swastik Insulators are concerned, two of these pertain to the invoices issued against the materials supposed to have been received by them from M/s Rajeswari Metallurgicals Limited, Bhiwadi, Mumbai. In respect of these invoices, the evidences in favour of the Revenue are the statements of Shri R.S. Elanjeran, Proprietor of M/s Swastik Insulators given on 31.03.2008 in which he confirmed that they have not received any material nor sold it to the appellant and have only issued invoices and made entries in their records and registers. Shri Elanjeran has not been cross examined as he was unwell but he gave in writing a letter that he stood by whatever statement he had made before the Officers of DGCEI. Therefore, to this extent, the evidence is against the appellant and in favour of the Revenue. Invoices at Sl.No. 3 to 7 issued by M/s Swastik Insulators on the basis of invoices received from M/s M.M. Enterprises, Chennai. The evidence adduced by the Revenue in respect of these consignments is the aforesaid statement of Shri R.S. Elanjeran, Proprietor of M/s Swastik Insulators who affirmed that he had neither received the goods nor supplied the same which he stood by in the form of a letter when called for cross examination. He was not cross examined as he was suffering from cancer. There is no dispute regarding the transporters or the truck numbers as far as these goods are concerned. The invoice at Sl.No. 8 of the statement issued by M/s Sree Enterprises, the evidence which the department has in respect of these invoices is the statement of Shri Anil Goel recorded during the investigation which was negated by him when cross examined during hearing before the adjudicating authority. He was not re-examined by the Revenue to prove that his original statement was correct and his statement during cross examination was not correct - Shri Anil Goel in his statement asserts that all materials were received and sold out and the power consumption was enough to draw the wire. These issues were not contested by the Revenue during adjudication proceedings by re-examining Shri Anil Goel. Thus, there is not sufficient evidence to deny CENVAT Credit to the appellant against any of the eight invoices or to hold that the goods have not been received against them. Therefore, the demands raised in the show cause notice and confirmed by the Order-in- Original and upheld by the impugned order need to be set aside. Consequently, the interest and penalties also need to be set aside against the assessee. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Entitlement to CENVAT Credit on eight disputed invoices.
2. Validity of evidence provided by the Revenue to deny CENVAT Credit.
3. Validity of evidence provided by the appellant to claim CENVAT Credit.
4. Imposition of penalties on individuals associated with the appellant.

Issue-wise Detailed Analysis:

1. Entitlement to CENVAT Credit on Eight Disputed Invoices:
The primary issue was whether the appellant was entitled to CENVAT Credit on eight disputed invoices. The Revenue alleged that the appellant had not received any material against these invoices and had only received the invoices, thereby wrongly availing CENVAT Credit. The appellant contended that they had indeed received the material and accounted for it in their stock register and production records, thus being entitled to the CENVAT Credit.

2. Validity of Evidence Provided by the Revenue to Deny CENVAT Credit:
The Revenue's case was based on the investigation by the Directorate General of Central Excise Intelligence (DGCEI) which included statements from various individuals and verification of transportation documents.
- Invoices 1 & 2: Statements from Shri R.S. Elanjeran (Proprietor, M/s Swastik Insulators) and Shri Muthukari Jayaram (Managing Director, M/s Rajeswari Metallurgicals Limited) indicated that no material was received or supplied, only invoices were issued. However, during cross-examination, Shri Jayaram negated his previous statement, claiming it was made under coercion.
- Invoices 3 to 7: Statements from Shri R.S. Elanjeran and Shri M.R. Mardia (Proprietor, M/s M.M. Enterprises) initially supported the Revenue's case but were negated during cross-examination.
- Invoice 8: Statements and investigations suggested that M/s Sree Enterprises could not have manufactured the goods due to insufficient power consumption and non-existent suppliers. However, Shri Anil Goel (Chief Executive, M/s Sree Enterprises) asserted during cross-examination that all materials were received and processed.

3. Validity of Evidence Provided by the Appellant to Claim CENVAT Credit:
The appellant provided evidence that all goods were received, accounted for in their records, and used in the manufacture of final products. Payments were made by cheque, and there was no discrepancy in their stock registers or CENVAT credit records. Statements from the appellant's executives supported their case.

4. Imposition of Penalties on Individuals Associated with the Appellant:
The show cause notice proposed penalties on the appellant's executives under Rule 26 of the Central Excise Rules, 2002. However, since the primary demand for CENVAT Credit was found to be unsustainable, the penalties imposed on these individuals were also set aside.

Conclusion:
The Tribunal found that the evidence provided by the Revenue was insufficient to deny the appellant CENVAT Credit on the disputed invoices. The statements supporting the Revenue's case were negated during cross-examination and were not re-examined by the Revenue. The appellant's records and cross-examinations supported their claim of receiving and using the materials. Consequently, the demands, interest, and penalties were set aside, and the appeals were allowed with consequential reliefs.