2016 (6) TMI 271 - AT - Central Excise

Tribunal overturns duty demand, interest, and penalty on appellant for alleged cenvat credit issue

The Tribunal allowed the appeal, setting aside the duty demand, interest, and penalty imposed on the appellant for alleged cenvat credit on paper ... Cenvat credit on paper transactions not physically received - Held that:- The manufacture supplier of the goods is not M/s Jai kara Steel Rolling Mills at all. No investigation has been conducted by the Revenue at the end of manufacturer supplier who has issued the invoices on which the appellant has taken Cenvat Credit. No investigation was conducted from the transporters to ascertain the fact whether goods have been transported to the appellant's factory or not. Merely on the ground that M/s Jyoti Steels is non-existent and having no godown, denial of cenvat credit proposed. It is not disputed by the Revenue that during the relevant period, M/s Jyoti Steels was the registered dealer and registration was granted to M/s Jyoti Steels by Central Excise Registration Department. If a supplier of goods is the registered dealer of the department itself, the department cannot allege that dealer is non-existent unless and until registration is cancelled. Admittedly, in the case the appellant is able to produce the invoice against which appellant has availed cenvat credit and the same has been entered in their RG-23 Reigster therefore, the burden lies on the revenue to prove that this is only a paper transaction and the goods have not been received by the appellant at all. To ascertain this fact that appellant has not received the goods, the statement of transporter is very much relevant to find out the truth. Moreover, the investigation at the end of manufacture supplier may also reveal the truth whether the manufacture supplier has supplied the goods to the appellant through the registered dealer or not but the same has not been discharged by the revenue. Thus the charge against the appellant that they have not received goods and it was only the paper transaction is not sustainable. - Decided in favour of assessee. Issues involved:Appeal against duty demand, interest, and penalty due to alleged cenvat credit on paper transactions without physically receiving goods.Detailed Analysis:1. Allegation and Investigation:The appellant appealed against confirmed duty demand, interest, and penalty for allegedly taking cenvat credit on paper transactions without physically receiving goods. The investigation revealed discrepancies at M/s Jai kara Steel Rolling Mills and M/s Jyoti Steels, leading to the issuance of a show cause notice to the appellant.2. Appellant's Argument:The appellant, a manufacturer buyer, claimed to have received goods from M/s Jyoti Steels against invoices showing M/s R.S. Enterprises/M/s Mittal Steel Industries & Rolling Mills as manufacturers. They contended that without investigating the transporter or manufacturer supplier, the demand was unsustainable. Legal precedents were cited to support their argument.3. Revenue's Opposition:The Revenue argued that since the first stage dealer issuing the invoice was non-existent, the appellant's claim of receiving goods was baseless. They highlighted the lack of cooperation from the first stage dealer and burdened the appellant to prove physical receipt of goods, which they failed to do.4. Judgment and Analysis:The Tribunal observed that the investigation did not extend to the manufacturer supplier or transporters to verify goods' delivery. The denial of cenvat credit based on the non-existence of M/s Jyoti Steels was deemed unjustified, especially since M/s Jyoti Steels had valid registration during the relevant period.5. Rule Interpretation:Rule 9(3) of the cenvat credit Rules 2002 mandates the assessee to ensure the accompanying documents' authenticity when claiming cenvat credit. The burden of proving non-receipt of goods rested on the Revenue, emphasizing the relevance of the transporter's statement and investigation at the manufacturer supplier's end.6. Legal Precedents:The Tribunal distinguished the cited case laws, emphasizing the appellant's status as a registered dealer and the presence of material evidence supporting goods receipt. The burden of proof shifted to the Revenue, which failed to demonstrate non-receipt of goods.7. Conclusion:The Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The charge that the transaction was merely on paper and goods were not received by the appellant was deemed unsustainable based on the evidence presented.This detailed analysis of the judgment highlights the key arguments, legal interpretations, and the Tribunal's decision, providing a comprehensive understanding of the case.