Tribunal grants waiver of CENVAT credit and penalty due to insufficient evidence

The Tribunal granted the appellant's application for waiver of predeposit of CENVAT credit and penalty amounting to Rs.23,51,297. The Tribunal found that the evidence provided by the Revenue was insufficient to establish that the inputs were not utilized in manufacturing, despite allegations that only invoices were received and credit was availed. The Tribunal concluded that the appellant had made a prima facie case for the waiver of all dues adjudged, allowing the stay application and providing relief to the appellant during the appeal process.

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Issues:
Application for waiver of predeposit of CENVAT credit and penalty.

Analysis:
The appellant sought waiver of predeposit of CENVAT credit and penalty amounting to Rs.23,51,297/-, pertaining to the receipt and utilization of inputs from a supplier. The appellant claimed that the inputs were received, accounted for, and used in manufacturing finished goods, which were cleared after payment of duty. The demand was raised based on allegations that the inputs were not received, but only invoices were received and credit was availed. The adjudicating authority found the evidence insufficient to conclude that the inputs were not utilized in manufacturing, hence dropping the proceedings. However, on appeal by the Revenue, the Commissioner(Appeals) allowed the appeal, stating that the appellant failed to establish receipt and utilization of the goods.

The Revenue initiated proceedings based on an alert by DGCEI, Ludhiana, recording statements of various persons from the appellant-company. It was noted that, except for the proprietor, other employees could not definitively confirm the receipt and utilization of the inputs in manufacturing finished goods. The Revenue argued that there was a prima facie case against the appellant for failing to establish receipt and utilization of the input materials.

After hearing both sides and examining the records, the Tribunal found that the appellant was alleged to have availed CENVAT credit without actually receiving the inputs, based on invoices from the supplier. The Tribunal noted that the evidence provided by the Revenue, such as non-passing of vehicles through check-posts and discrepancies in vehicle numbers, was not sufficient to deny CENVAT credit, especially when the sale was ex-delivery. The Tribunal concluded that the appellant had made a prima facie case for the waiver of all dues adjudged, and accordingly, predeposit of the dues was waived, with recovery stayed during the appeal process. The stay application was allowed, providing relief to the appellant.

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