Court quashes denial of Cenvat credit for lack of evidence

The appellant challenged the denial of Cenvat credit on inputs due to alleged discrepancies in invoices without physical receipt of goods. The Revenue failed to produce evidence from the supplier or conduct thorough investigations. Relying on a precedent from the Hon'ble High Court of Punjab and Haryana, the court found the demand unsustainable without proper independent inquiry. Consequently, the impugned order was set aside, and the appeal was allowed with potential consequential relief for the appellant.

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Issues Involved:
Cenvat credit denial based on invoices without physical receipt of goods.

Analysis:
The appellant appealed against the denial of Cenvat credit on inputs due to allegedly taking credit based on invoices without receiving the goods physically in their factory. The investigation was conducted against the supplier of the goods as the supplier did not produce any documents, leading to a show cause notice issued to the appellant. Both lower authorities confirmed the demand and imposed penalties. The appellant contended that no statements from the supplier or any corroborative evidence were produced to deny Cenvat credit. The appellant argued that without proper investigation, credit cannot be denied, citing a case from the Hon'ble Punjab and Haryana High Court. The appellant emphasized the lack of investigation in their factory or statements from transporters. The appellant's counsel highlighted the need for a thorough investigation before denying credit.

The Revenue argued that the supplier was untraceable and did not provide any records, stating that invoices were issued but goods were not supplied. The Revenue supported the lower authorities' conclusion that the appellant did not physically receive the goods and only took credit based on invoices. After hearing both parties and reviewing the records, it was noted that no statement from the supplier regarding the appellant was recorded to confirm non-supply of goods. Additionally, no other investigations were conducted, such as physical stock-taking or statements from the supplier or the appellant. Relying on a decision of the Hon'ble High Court of Punjab and Haryana, it was held that the demand was not sustainable without an independent enquiry against the appellant. As no proper enquiry was conducted, the impugned order was deemed to have no merits and was set aside. The appeal was allowed with consequential relief, if any, granted to the appellant.

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