Appeal allowed due to lack of evidence; Previous case cited for support.

The appeal was allowed in favor of the appellants as the Tribunal found no evidence to suggest that the appellants were aware of the supplier's fraudulent excess credit claim. The decision in a previous case was cited to support the appellants' argument, leading to the denial of Cenvat Credit being overturned.

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Issues:
Denial of Cenvat Credit on special denatured spirit due to supplier's fraudulent excess credit claim.

Analysis:
The case involved the denial of Cenvat Credit on special denatured spirit received by M/s.Laxmi Organics Industries Ltd. from M/s.Hanil Era Textile Ltd. The denial was based on the allegation that the supplier had fraudulently claimed excess Cenvat Credit by showing more credit than legally available, which was then used to pay duty for supplying the spirit to the appellant. The lower authorities had confirmed the demand, leading the appellants to appeal before the Tribunal.

The appellant's counsel argued that while the supplier may have engaged in wrongdoing, there was no evidence of any wrongdoing on the part of the appellants. Reference was made to the Tribunal's decision in the case of RS Industries Vs. CCE, New Delhi, which was subsequently upheld by the Delhi High Court. Another case cited was Prachi Poly Products Ltd., Vs. CCE, Raigad, where it was held that credit cannot be denied if the supplier defaults on duty payment.

On the other hand, the Assistant Commissioner (AR) relied on the impugned order and cited the Tribunal's decision in CCE, Bhopal Vs. Maihar Cement, along with decisions from the High Courts of Madras and Gujarat. The Tribunal, after considering the arguments, noted that in previous cases where credit was denied, there were clear indicators like deficiencies in invoices or reliance on documents from fictitious firms, which alert buyers could have detected. In the present case, there was no evidence to suggest that the appellants were aware of the supplier's wrongful credit claim. The Tribunal found that the decision in the case of RS Industries covered the issue and allowed the appeal in favor of the appellants.

The judgment was pronounced on 29/07/16 by Mr. Raju, Member (Technical) of the Appellate Tribunal CESTAT MUMBAI.

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