Tribunal Upholds Cenvat Credit Despite Non-Existent Supplier

The Tribunal dismissed the Revenue's appeal, upholding the order allowing cenvat credit to the respondent despite the non-existence of the supplier, M/s S.K. Garg & Sons. The Tribunal emphasized the lack of thorough investigations at the supplier's and transporter's ends to substantiate the claim that goods were not received. Without corroborative evidence, the allegation of non-receipt of goods based on the supplier's non-existence was deemed unsustainable, leading to the affirmation that cenvat credit cannot be denied without comprehensive investigations.

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Issues:
Cenvat credit denial based on non-existence of supplier M/s S.K. Garg & Sons.

Analysis:
The appeal was filed by the Revenue against an order allowing cenvat credit on inputs to the respondent, based on the premise that the supplier, M/s S.K. Garg & Sons, did not exist and had only issued invoices without supplying goods. The investigation revealed that the premises of M/s S.K. Garg & Sons were locked and non-existent, leading to the cancellation of their registration. The respondent had procured goods from M/s S.K. Garg & Sons and availed cenvat credit. A show cause notice was issued, denying the credit and proposing duty, interest, and penalty. The Commissioner (Appeals) allowed the credit, stating that the documents showed all required particulars and were co-relatable with duty-paying documents. The Revenue contended that as M/s S.K. Garg & Sons did not have storage capacity, the credit should not be allowed.

The AR argued that M/s S.K. Garg & Sons was engaged in issuing fake invoices for cenvat credit, as confirmed by Preventive Officers' visit and lack of storage facilities. The absence of investigation at the supplier's end was highlighted, where goods were allegedly not received by the appellant on the same day as invoicing. The respondent's counsel emphasized that the goods were physically received and used in manufacturing, with no incriminating statement. They also pointed out the lack of investigation with the transporter or manufacturer/supplier of the goods.

The Tribunal found that crucial investigations were missing at the supplier's and transporter's ends to ascertain the truth. M/s S.K. Garg & Sons had filed ER-1 returns accepted by the department, and the landlord confirmed the existence of the godown. Relying on precedent cases, including M/s Dhawan Steel Industries, the Tribunal upheld the impugned order, stating that without corroborative evidence, the allegation of not receiving goods based on the non-existence of the supplier was not sustainable. The appeal by the Revenue was dismissed, affirming that cenvat credit cannot be denied without thorough investigations at the supplier's and transporter's ends.

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