Tribunal grants Cenvat credit after finding appellant diligent in recording transactions and using goods

The Tribunal overturned the denial of Cenvat credit to the appellant based on invoices from an alleged non-existent supplier. Despite the supplier being found non-existent during the investigation, they were a registered dealer when supplying goods. The appellant demonstrated diligence in recording transactions and using goods in final products with duty payment. Lack of evidence supporting Revenue's claims, doubts on input sources without accompanying invoices, and the supplier's exclusion from penalties led the Tribunal to rule in favor of the appellant, granting relief due to the benefit of doubt.

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Issues: Denial of Cenvat credit based on invoices from a non-existent supplier.

Analysis:
The appellant appealed against the denial of Cenvat credit based on invoices from M/s Dewas Conductors, a supplier alleged to be non-existent. The investigation revealed that the supplier issued invoices solely for the appellant to avail inadmissible Cenvat credit without transferring any goods. A show cause notice was issued, leading to the denial of credit, imposition of penalties, and confirmation of the demand by lower authorities. The appellant contended that they were genuine purchasers who received and used the goods, duly recorded the transactions, and paid through legitimate means. They argued that the supplier was not involved in the proceedings, and no evidence corroborated the allegations. The Revenue claimed that the appellant's partner admitted guilt and voluntarily reversed the credit. However, the appellant maintained their innocence, emphasizing their compliance and the lack of evidence against them.

The Tribunal considered the lack of evidence supporting the Revenue's allegations. Despite the supplier being found non-existent during the investigation, they were a registered dealer at the time of supplying goods to the appellant. The appellant demonstrated due diligence in recording transactions and using the goods in their final products, cleared with duty payment. The absence of proof regarding the source of the inputs in the absence of accompanying invoices raised doubts. Furthermore, the supplier was not included in the show cause notice for penalties. Consequently, the Tribunal ruled in favor of the appellant, overturning the impugned order and granting relief due to the benefit of doubt.

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