Tribunal overturns demand & penalty for Cenvat credit lapse due to insufficient evidence

The Tribunal set aside the order confirming the demand and penalty against the Appellant for availing Cenvat credit on Plastic Granules without concrete evidence. Lack of corroboration with the Appellant's records and discrepancies in statements raised doubts. The Tribunal noted similar cases where demands were dismissed, concluding the confirmation of demand and penalty was unjustified. The appeal was allowed in favor of the Appellant, highlighting the lack of substantial evidence linking them to the alleged wrongdoing.

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Issues:
Availment of Cenvat credit on inputs namely, Plastic Granules for the period October 2005 to Dec 2007.

Analysis:
The Appellant, engaged in manufacturing Polythene Bags and Sheets, availed Cenvat credit on inputs but faced a dispute regarding the credit on Plastic Granules. The show cause notice alleged that the Appellant availed credit on invoices without actual delivery of goods, diverting them to another location. The Additional Commissioner confirmed the demand and penalty, upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

The Appellant's counsel argued that the evidence against them was from third parties, not corroborated by their records. They emphasized that no incriminating records were found in their factory, and all transactions were legitimate. The Appellant's position was supported by various judgments, highlighting the lack of concrete evidence against them.

The Tribunal noted that the demand was based on records and statements from individuals associated with another company, not maintained in the regular course of business. Lack of corroboration with the Appellant's records raised doubts about the allegations. The Tribunal also found discrepancies in the statements of the transporter and confirmed that most consignments were directly received by the Appellant, with no evidence of diversion.

Referring to similar cases from the same investigation, where demands were set aside or appeals dismissed, the Tribunal concluded that the confirmation of demand and penalty were unjustified. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the Appellant.

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