Appellant Wins Cenvat Credit Battle Over Supplier Registration Issue

The appellant's Cenvat credit was initially denied due to using invoices from a registered dealer whose registration was later cancelled. Despite allegations of paper transactions, no direct link to the appellant was established. The appellant had properly recorded and utilized the invoices for manufacturing final products, with no evidence of unauthorized sourcing. Relying on a previous Tribunal decision with similar circumstances, the current judgment favored the appellant, overturning the denial of Cenvat credit. The decision emphasized the importance of verifying suppliers' identities rather than their sourcing legality, providing relief to the appellant.

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Issues:
1. Denial of Cenvat credit based on invoices from a registered dealer.
2. Allegation of paper transactions by the registered dealer.
3. Interpretation of Rule 7 of Cenvat Credit Rules.
4. Comparison with a previous Tribunal decision.

Analysis:
1. The appellant's Cenvat credit of Rs. 71,022 was denied due to availing it based on invoices from M/s. Sidh Industries, a registered dealer, whose registration was retrospectively cancelled. The period in question was when the dealer was registered. The Revenue relied on statements suggesting paper transactions, but no direct link to the appellant was established.

2. The appellant had entered the invoices in their register and used them for manufacturing final products. There was no evidence indicating non-receipt of inputs or procurement from unauthorized sources. Without these inputs, final products couldn't have been manufactured. Rule 7 of Cenvat Credit Rules imposes the obligation to verify the supplier's identity, not their sourcing legality.

3. A similar case was decided in Talson Mill Store v. CCE & ST, Ludhiana, where the Tribunal favored the assessee, emphasizing the insufficiency of relying solely on statements. Given the identical circumstances, the current judgment followed the precedent and allowed the appeal, providing relief to the appellant.

4. The judgment, delivered on 27-2-2014 by Ms. Archana Wadhwa, Member (J), overturned the denial of Cenvat credit, highlighting the importance of proper verification of suppliers' identities as per Rule 7. The decision aligned with the Tribunal's consistent stance on such matters, ensuring fair treatment for appellants facing similar issues.

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