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2022 (11) TMI 1002 - AT - Central ExciseCENVAT Credit - Furnace Oil - non-existence suppliers - fake firms - fake invoices - inadmissible duty paying documents - Rule 9(1)(a) of CENVAT Credit Rules, 2004 - alert notice No.01/2013 dated 30.07.2013 issued confirming that M/s. Sri Kamala Udyog, Rishra has no existence - whether the Appellant can be denied CENVAT Credit of Rs.92,660/- only on the basis of alert circular? - invocation of extended period of limitation. HELD THAT - In the present case, the Appellant was a bona fide purchaser of the goods for a price which included duty element on the basis of a valid certificate of registration issued to the manufacturer/supplier by the Superintendent of Central Excise supported with Cenvatable invoice. The Appellant has substantively taken reasonable steps to comply with the provisions of Rule 9(5) - The fact that the assessee made payments by cheque is held to be a proof of his bona fide. Further, the Revenue has failed to establish that the Appellant received any unlawful kickback for executing the alleged purchase. The buyer can take only those steps which are within his control and can not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trust-worthy, as the inputs are in fact received and the documents, prima facie, appeared to be genuine - The Circular of the Central Board of Excise and Customs dated 15.12.2003 clarifying that CENVAT Credit should not be denied to a user manufacturer as long as bona fide nature of the consignee s transaction is not doubted. 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 held that the assessee has taken reasonable steps to ensure that the inputs in respect of which he has taken CENVAT Credit were goods on which appropriate duty of excise was paid. Once, it is demonstrated that reasonable steps had been taken which is a question of fact in each case it would be contrary to the Rule to cast impossible and impractical burden on the assessee. Extended period of limitation - Show Cause Notice was issued on 27.01.2016 whereas the normal period expired on 08.09.2013 - suppression of facts or not - HELD THAT - In the present case, the Department has undertaken Audit of the Books of Account for the period 2012-13 to 2014-15 on dated 28.05.2016 i.e., much after the issue of Demand-cum-Show Cause Notice. However, no adverse inference has been drawn against the CENVAT Credit availed. Thus there is no failure and/or willful suppression of any fact of the transaction by the Appellant, having entered and recorded the transaction in its books of accounts. Therefore, no longer period could be invoked - the Appellant have a strong case on limitation too and the Show Cause Notice is barred by limitation. Existence of supplier M/s. Sri Kamala Udyog - HELD THAT - Central Excise Registration granted to M/s. Sri Kamla Udyog is bonafidely issued by the departmental authorities. Invoice was issued to the appellant by M/s. Sri Kamla Udyog fulfilling all the requirements of Central Excise Rules - It is further submitted by the Appellant that on the date of the visit of the Central Excise officers, they had recovered 40.73 lakhs from both the dealer i.e. M/s.Sri Kamla Udyog and M/s. Bedanta Petro. Therefore, it further strengthens the Appellant s contention that M/s. Sri Kamala Udyog existed on 30.07.2013 even. Thus, the Appellant being a bonafide purchaser of goods for a price which included the duty element and payment made by cheque, having received the inputs at his premise and entered into the statutory records maintained by the Appellant demonstrating transportation of goods from Rishra Road, Hooghly, West Bengal to Chancha Industrial Estate, Baripada, Mayurbhanj, the Appellant has rightly availed CENVAT Credit with the required Cenvatable documents. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Denial of CENVAT Credit on Furnace Oil. 2. Validity of the invoices from M/s. Sri Kamala Udyog. 3. Applicability of the extended period for issuing the Show Cause Notice. 4. Bona fide nature of the Appellant's transactions. Issue-wise Detailed Analysis: 1. Denial of CENVAT Credit on Furnace Oil: The Appellant, engaged in manufacturing various steel products, purchased Furnace Oil and availed CENVAT Credit on the basis of invoices issued by M/s. Sri Kamala Udyog. The Department issued a Show Cause Notice alleging that M/s. Sri Kamala Udyog did not exist and had issued fake invoices, thereby making the CENVAT Credit inadmissible. The Ld. Commissioner (Appeals) upheld the adjudication order, leading to the present appeal. 2. Validity of the Invoices from M/s. Sri Kamala Udyog: The Appellant argued that the invoices contained all necessary details as per Rule 9(1) of the CENVAT Credit Rules, 2004, including duty payment particulars and registration numbers. The goods were received and used in manufacturing, and payments were made through cheques. The Appellant provided supporting documents such as way bills, vehicle registration status, and bank statements to prove the genuineness of the transactions. The Tribunal noted that the invoices and other documents appeared genuine and satisfied the conditions for availing CENVAT Credit. 3. Applicability of the Extended Period for Issuing the Show Cause Notice: The Appellant contended that the Show Cause Notice, issued on 27.01.2016, was barred by limitation as the normal period expired on 08.09.2013. The Tribunal found that the Department had audited the Appellant's books for the relevant period without raising any adverse findings. Therefore, the extended period could not be invoked due to the lack of willful suppression or failure to disclose material facts by the Appellant. 4. Bona Fide Nature of the Appellant's Transactions: The Tribunal emphasized that the Appellant was a bona fide purchaser who had taken reasonable steps to ensure the legitimacy of the transactions. The Appellant had complied with the provisions of Rule 9(5) and demonstrated due diligence in verifying the supplier's credentials. The Tribunal referenced the judgment of the Hon'ble Allahabad High Court in the case of Commissioner of Central Excise, Customs & Service Tax Vs. Juhi Alloys Ltd., which held that an assessee is not required to verify the records of the supplier beyond ensuring the genuineness of the invoices and the receipt of goods. Conclusion: The Tribunal concluded that the Appellant had rightfully availed CENVAT Credit based on valid documents and bona fide transactions. The impugned orders were set aside, and the appeal was allowed with consequential relief. The Tribunal also noted that the Department's audit did not find any discrepancies, further supporting the Appellant's case. Final Order: (Order pronounced in the open court on 22 November 2022.)
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