2018 (7) TMI 1269 - AT - Central Excise

Tribunal grants Cenvat Credit in appeal, emphasizing burden of proof on Revenue.

The Tribunal set aside the Order-in-Appeal disallowing Cenvat Credit to the appellant based on alleged fraudulent transactions. Relying on legal ... CENVAT Credit - fake invoices - entire allegation was made out against the appellant on the basis of the statement of the third party - Held that:- It is seen that the entire allegation was made out against the appellant on the basis of the statement of the third party. There is no material available on record of any cash transaction between the appellant and the Dealer. Further it has failed to investigate the encashment of the cheque as stated by the Director of the appellant company. Identical issue decided in the case of M/S. GONTERMMANN PEIPERS (INDIA) LTD., SHRI LALIT KR. PODDAR VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA [2017 (11) TMI 769 - CESTAT KOLKATA], where it was held that In the absence of such cross-examination and examination in chief, the statement on which the Revenue seeks to rely, have to be excluded from evidence. Appeal allowed - decided in favor of appellant. Issues:Appeal against Order-in-Appeal disallowing Cenvat Credit based on fraudulent transactions.Analysis:The case involved an appeal against the Order-in-Appeal disallowing Cenvat Credit on the basis of alleged fraudulent transactions. The appellant, engaged in manufacturing Non Alloy Steel Ingots, was accused of availing Cenvat Credit fraudulently based on invoices issued by a registered dealer. The Adjudicating authority disallowed the credit, imposed penalties, and the Commissioner (Appeals) upheld the decision.The appellant argued that they purchased goods from a registered dealer with Central Excise Invoices, which were used in manufacturing final products. The case heavily relied on the statement of a third party. The Tribunal noted that the entire allegation was based on third-party statements without concrete evidence of cash transactions between the appellant and the dealer. The failure to investigate the encashment of cheques further weakened the case against the appellant.The appellant cited a Tribunal decision involving similar facts, where the Order was set aside. Referring to various legal precedents, the appellant's counsel argued that the appellant was entitled to claim Cenvat Credit based on invoices issued by the dealer, even if the dealer had issued fake invoices. The Tribunal highlighted previous decisions supporting the appellant's position, emphasizing that the Revenue needed to provide sufficient evidence to deny the credit.In a detailed analysis of relevant case laws, the Tribunal found that previous decisions supported the appellant's claim for Cenvat Credit. Citing specific cases and legal principles, the Tribunal concluded that the appellant should be granted the benefit of the doubt based on the lack of concrete evidence against them. The Tribunal set aside the impugned Order, allowing the appeal filed by the appellant, based on the principles established in previous judgments.In conclusion, the Tribunal's decision to set aside the Order-in-Appeal and allow the appeal was based on the lack of substantial evidence against the appellant and the application of legal precedents supporting the appellant's entitlement to claim Cenvat Credit. The detailed analysis of case laws and the lack of concrete proof of fraudulent transactions led to the favorable judgment for the appellant.