2020 (7) TMI 182 - AT - Central Excise

CENVAT Credit - duty paying documents - credit denied on the ground that the appellants have received only cenvatable invoices and not the goods - HELD THAT - Considering the fact that similar investigation has been conducted by the DGCEI against Shri Amit Gupta and show cause notices were issued to the recipients of goods against whom the invoices were issued by Shri Amit Gupta to various firms, one such firm M/s. Unnati Alloys Pvt. Ltd. Neither cross examination of Shri Amit Gupta nor Shri Amit Gupta was made party to the show cause notice which shows that the investigation conducted against the appellant is not proper. Moreover, the transporters were also not examined at all nor made party to the show cause notice. The benefit of doubt goes in favour of the appellants that they have received the goods against cenvatable invoices issued by M/s. Unnati Alloys Pvt. Ltd., in question and made payment through account payee cheque. The goods received by the appellant for manufacturing of goods, which has been cleared on payment of duty - Cenvat credit allowed to the appellants - also the show cause notices are not required to the issued to the appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of credit based on receipt of only cenvatable invoices, existence of goods receipt against invoices, validity of investigation by DGCEI, cross-examination of involved parties, examination of transporters, benefit of doubt in favor of appellants.

Analysis:
The appellants appealed against the denial of credit due to allegedly receiving only cenvatable invoices without the corresponding goods. The investigation revealed a scheme involving passing on inadmissible Cenvat credit through registered dealers. The appellant claimed to have received goods against invoices from a specific entity, supported by payment through account payee cheque. However, the transporter mentioned in the process was found non-existent during the investigation, raising doubts about the actual receipt of goods.

The Tribunal noted similar investigations by DGCEI against other parties involved in the scheme, where show cause notices were issued. In contrast, the appellant in this case was not provided the opportunity for cross-examination of key individuals or parties involved, including the transporter. The Tribunal highlighted a case where the appellant demonstrated the capability of each vehicle mentioned in the goods receipts for transportation, leading to a benefit of doubt in favor of the appellants regarding goods receipt against cenvatable invoices. Consequently, the Tribunal allowed Cenvat credit to the appellants, emphasizing that show cause notices were unnecessary.

In conclusion, the Tribunal set aside the impugned order, allowing the appeals with any consequential relief. The decision was based on the benefit of doubt in favor of the appellants regarding the receipt of goods against cenvatable invoices, supported by the payment made through account payee cheque. The Tribunal's analysis focused on the lack of proper investigation procedures and the absence of opportunities for cross-examination and examination of involved parties, leading to the decision in favor of the appellants.