CENVAT credit on dealer invoices disputed amid alleged non-receipt, parallel invoices, and conflicting views on limitation

CENVAT credit was contested on dealers' invoices where the Department alleged non-receipt of duty-paid inputs and use of parallel or invalid invoices. One Member held that the assessee had received the scrap, taken reasonable steps, and could not be denied credit for the dealer's alleged fraud, making the demand, interest, and penalties unsustainable. The other Member found the invoices non-genuine, the goods not proved to have crossed the Gujarat border, and the transport evidence supportive of the Department, and upheld invocation of the extended limitation period in a case of fraudulent credit availment. The matter was referred for a third Member because of the differing views on credit and limitation.

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Issues: Whether CENVAT credit taken on the strength of dealers' invoices was admissible when the Department alleged non-receipt of duty-paid inputs and use of parallel or invalid invoices; and whether the extended period of limitation and penalties could be invoked.

Analysis: The record showed two competing views. One Member held that the appellants had received the scrap, had taken reasonable steps, and could not be denied credit for the alleged fraud of the dealer, and therefore the demands, interest, and penalties were not sustainable. The other Member held that the dealer invoices were not genuine, the goods were not proved to have crossed the Gujarat border, the vehicle and transport evidence supported the Department, and the extended period was rightly invoked in a case of fraudulent availment of credit.

Outcome: There was a difference of opinion between the Members on both admissibility of credit and limitation, and the matter was directed to be placed before the Hon'ble Vice President/HOD for appointment of a third Member.

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