Steel manufacturer wins credit appeal despite non-existent supplier issue

The Tribunal allowed the appeal of a steel bar manufacturer denied credit on inputs due to issues with a non-existent supplier and locked dealer premises. Despite lower authorities demanding duty, interest, and penalties, the Tribunal held that the appellant was entitled to credit as there was no obligation to verify the supplier's existence before procurement without credible evidence of non-receipt. The impugned order was set aside, granting the appellant relief.

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Issues: Denial of credit on inputs due to non-existent supplier/manufacturer and locked dealer premises.

Analysis:
1. The appellant, engaged in manufacturing steel bars, appealed against the denial of credit on inputs due to issues with the supplier and manufacturer.
2. An investigation revealed that the manufacturer M/s. Jaikara Steel Rolling Mills was non-existent, and the dealer M/s. Jyoti Steels' premises were found locked.
3. The appellant admitted to receiving goods from the dealer, which were used in manufacturing final products, with payments made through account payee cheques.
4. The lower authorities denied credit, demanding duty, interest, and imposing a penalty, leading to the appellant's appeal.
5. The appellant argued that no investigation was conducted at the dealer's end, and the transporter's involvement was not verified, relying on relevant tribunal decisions.
6. The learned AR supported the denial of credit based on the non-existence of manufacturing facilities by the supplier/manufacturer.
7. The Tribunal observed the delayed investigation at the appellant's end, the goods being recorded in statutory records, and no verification of the transporter's role.
8. The Tribunal held that the appellant was entitled to credit as there was no duty to verify the supplier/manufacturer's contents before procurement without credible evidence of non-receipt.
9. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This detailed analysis highlights the key arguments, findings, and legal reasoning in the judgment regarding the denial of credit on inputs due to issues related to the supplier/manufacturer and locked dealer premises.

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