Cenvat Credit Denial Upheld on Circumstantial Evidence of Non-Receipt and Fraudulent Availment; Procedural Objections Rejected

Credible circumstantial evidence of non-receipt of goods, including non-existent transporters, suspicious banking transactions and missing weighment slips, was held sufficient to justify denial of Cenvat credit where irregular availment had already been established in respect of some invoices; the demand for reversal of credit was restored. Procedural objections to the Revenue appeal were rejected because the authorization was backed by an annexure stating the grounds of appeal, and the complaint of non-supply of documents had not been raised before the lower authorities. The appellate order setting aside the demand was overturned and the original demand and penalty-related findings were reinstated.

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Issues: (i) Whether the denial of Cenvat credit and restoration of the demand were justified on the basis of evidence showing non-receipt of goods and fraudulent availment of credit. (ii) Whether the Revenue appeal was vitiated by the objection regarding authorization and non-supply of documents.

Issue (i): Whether the denial of Cenvat credit and restoration of the demand were justified on the basis of evidence showing non-receipt of goods and fraudulent availment of credit.

Analysis: The Tribunal noted that the Commissioner (Appeals) had already upheld the demand in respect of several invoices where credit had been taken without receipt of goods, which indicated a pattern of malpractice. It further found that the Revenue had placed material showing non-existence of transport lines, suspicious banking transactions, missing weighment slips, and other circumstances creating a strong doubt about actual receipt of goods. In the setting of established irregular conduct in respect of some consignments, the evidence was held sufficient to discharge the Revenue's burden under the credit scheme.

Conclusion: The issue was decided in favour of the Revenue. The demand of reversal of Cenvat credit was restored.

Issue (ii): Whether the Revenue appeal was vitiated by the objection regarding authorization and non-supply of documents.

Analysis: The Tribunal found that the authorization was supported by an annexure setting out the grounds of appeal, and therefore it was not a bare or defective authorization. It also held that the objection regarding non-supply of documents had not been raised before the original adjudicating authority or the first appellate authority, and could not be raised for the first time before the Tribunal.

Conclusion: The procedural objections were rejected.

Final Conclusion: The appellate order setting aside the demand was overturned and the original demand and penalty-related findings were reinstated.

Ratio Decidendi: When the Revenue produces credible circumstantial evidence showing that goods were not received and that credit was fraudulently availed, the burden stands discharged and the credit can be denied; belated procedural objections cannot defeat the appeal.

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