Tribunal rules in favor of appellant regarding Cenvat credit denial due to lack of supplier evidence

The Tribunal set aside the denial of Cenvat credit to the appellant based on the non-existence of the supplier, M/s. S.K. Garg & Sons. It was found that crucial investigations were lacking to prove the appellant did not receive the goods, and past cases supported the need for evidence from the supplier or transporter before denying credit. The Tribunal ruled in favor of the appellant, allowing the appeal and any consequential relief.

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

Analysis:
The appellant appealed against the denial of Cenvat credit on inputs due to the alleged non-existence of the dealer, M/s. S.K. Garg & Sons, who supplied the goods. Investigations revealed that the premises of M/s. S.K. Garg & Sons were locked, and the godown was non-existent. The registration of M/s. S.K. Garg & Sons was retrospectively canceled, leading to the denial of Cenvat credit to the appellant. A show cause notice was issued, resulting in duty demand, interest, and penalty imposition. The appellant contended that they physically received the goods and used them in manufacturing final goods, thus Cenvat credit should not be denied. The appellant argued that no investigation was conducted with the transporter or the manufacturer/suppliers of the goods. The appellant also cited a relevant decision to support their case.

The Departmental Representative opposed the appellant's contentions, stating that investigations confirmed the non-existence of M/s. S.K. Garg & Sons, who allegedly issued fake invoices for Cenvat credit. The Commissioner (Appeals) allowed credit only when goods were received on the same day as the invoice, denying credit if there was a delay. As M/s. S.K. Garg & Sons had no storage capacity, Cenvat credit was rightfully disallowed. After hearing both sides, the Tribunal found that crucial investigations were missing at the supplier or transporter's end to ascertain the truth. M/s. S.K. Garg & Sons had filed returns accepted by the department, and without corroborative evidence showing the appellant did not receive the goods, the denial of Cenvat credit was unjustified.

The Tribunal referred to past cases where similar issues were examined. In one instance, the Tribunal dismissed the Revenue's appeal due to lack of tangible evidence supporting the allegations against the respondent. Another case upheld the decision that without investigations at the supplier or transporter's end, Cenvat credit cannot be denied. Relying on these precedents, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief.

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