2022 (2) TMI 5 - AT - Central Excise

CENVAT Credit - insufficient documents or not - credit availed on inputs without their receipt and use in or in relation to the manufacture of final products - HELD THAT - It is not disputed that the appellant have manufactured dutiable finished goods by using the inputs in question, and have cleared the same on payment of duty. Further, no alternative source of raw material have been identified by Revenue - The appellant have clearly established the genuineness of the transaction as regards purchase and receipt of inputs from the first stage dealer. Thus, the appellant has discharged their onus for credit of the goods as required under the scheme of the Act read with Cenvat Credit Rules. The issue is squarely covered by the decision of Hon ble Allahabad High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX VERSUS M/S. JUHI ALLOYS LTD., ANIL KUMAR SHUKLA 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT , where it was held that The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. The allegation of Revenue as regards non receipt of duty paid raw material is not substantiated by cogent evidence - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether denial of cenvat credit by the adjudicating Authority was justified based on the appellant's alleged wrongful availment of credit without receipt and use of inputs in manufacturing final products.

Analysis:

Issue 1: Denial of cenvat credit by the adjudicating Authority
The case involved the denial of cenvat credit amounting to &8377;40,26,474 by the adjudicating Authority, along with interest and penalties, on the grounds that the appellant had availed the credit on inputs without their receipt and use in or in relation to the manufacture of final products. The appellant, engaged in the manufacture of Stainless-Steel Pipes & Tubes, was alleged to have received invoices without actual receipt of goods, leading to the issuance of a show cause notice. The appellant contested the notice, providing evidence to substantiate their legitimate availment of credit. The adjudicating Authority confirmed the demand, which was upheld by the Commissioner (Appeals), prompting the present appeal.

Issue 2: Legitimacy of cenvat credit availment
The appellant argued that the allegation of wrongful availment of cenvat credit was baseless, supported by various pieces of evidence. They cited a judgment by the Hon'ble Allahabad High Court, emphasizing that the recipient should not be burdened with verifying the original manufacturer's genuineness beyond reasonable diligence. The appellant presented undisputed facts, such as accounting for purchases in excise records, transportation evidence, payment of freight, and bank transactions, to establish the genuineness of the transactions. They also relied on a judgment by the High Court of Jharkhand to support their contention that verifying the supplier dealer's duty payment was impractical.

Issue 3: Tribunal's decision
Upon considering the contentions, the Tribunal found that the appellant had substantiated the legitimate credit availment and the genuineness of transactions regarding the purchase and receipt of inputs. It noted that the appellant had used the inputs in manufacturing dutiable finished goods, cleared on payment of duty, without any alternative source of raw material identified by the Revenue. Relying on the Allahabad High Court judgment, the Tribunal held that the appellant had fulfilled their onus for credit of the goods under the Act and Cenvat Credit Rules. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential benefits to the appellant.

In conclusion, the Tribunal's decision highlighted the importance of substantiating the genuineness of transactions for cenvat credit availment and emphasized the recipient's reasonable diligence in verifying suppliers. The judgment serves as a precedent for cases involving the denial of cenvat credit based on alleged wrongful availment without proper receipt and use of inputs in manufacturing processes.