CESTAT rules in favor of appellants supplying inputs, finding lack of evidence for penalties

The Appellate Tribunal CESTAT ruled in favor of the appellants, registered dealers supplying inputs to manufacturers, in a case where penalties were imposed for alleged non-supply of inputs received from TISCO. The Tribunal found that the appellants had procured goods from TISCO, provided evidence of transportation, and received payment for supplying the inputs to manufacturers. Despite discrepancies in truck numbers on invoices, the recipients confirmed receiving and using the inputs. Citing lack of evidence for an alternative source of inputs and previous precedents, the Tribunal set aside the penalties imposed on the appellants.

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Issues involved: Imposition of penalties on appellants for alleged non-supply of inputs received from TISCO to manufacturers.

Summary:
In the appeals before the Appellate Tribunal CESTAT, penalties were imposed on the appellants, registered dealers supplying inputs to manufacturers, based on allegations that they had not physically supplied the inputs but only provided duty paying documents to their customers. The revenue contended that the appellants were liable for penalties as the inputs were not actually supplied to manufacturers, only duty paying documents were provided. However, the appellants argued that they had procured goods from TISCO's stockyard, made payments through bank drafts and cheques, and supplied goods to manufacturers against payment received through drafts/cheques. They presented octori receipts as evidence of transportation of goods and argued that there was no proof of an alternative source for the inputs. The Tribunal had previously set aside penalties in a similar case, further supporting the appellants' position.

The revenue's contention was that the truck numbers mentioned in the invoices did not match the vehicles used for transportation, and the appellants failed to provide information on the trucks used. However, during investigation, the recipients of inputs confirmed receiving and using the inputs in manufacturing goods cleared after payment of duty. With no evidence of an alternative source for inputs and considering the precedent of setting aside penalties in similar cases, the Tribunal ruled in favor of the appellants, setting aside the penalties imposed on them.

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