Tribunal allows Cenvat credit, penalties imposed, appeals disposed

The Tribunal held that the denial of Cenvat credit based on various statements without proper examination and cross-examination was not sustainable. The Revenue failed to establish that the inputs were not received by the appellant. The denial of Cenvat credit due to incorrect vehicle numbers mentioned in invoices was also deemed unjustified. The Tribunal allowed Cenvat credit of Rs. 3,96,29,825/-, imposed a penalty on the confirmed duty amount, and determined no penalty on the Director. The appeals were disposed of accordingly.

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Issues Involved:
1. Denial of Cenvat credit for non-receipt of PVC physically in the factory.
2. Denial of Cenvat credit based on statements of transporters and alleged non-use of EVA in the factory.
3. Denial of Cenvat credit due to incorrect vehicle numbers mentioned in invoices.

Issue-wise Detailed Analysis:

1. Denial of Cenvat Credit for Non-receipt of PVC Physically in the Factory:

The demand of Rs. 11,78,601/- was confirmed on account of the denial of Cenvat credit for non-receipt of PVC physically in the factory. The appellant did not contest this amount and had already paid it along with interest. Therefore, this demand was confirmed along with interest.

2. Denial of Cenvat Credit Based on Statements of Transporters and Alleged Non-use of EVA in the Factory:

The Cenvat credit of Rs. 2,72,64,532/- was denied based on the statements of transporters and the allegation that EVA was not used in the factory. The Tribunal noted that the entire demand was based on various statements that were never examined in chief nor offered for cross-examination. Citing the case of Kuber Tobacco India Ltd., it was held that such statements are not admissible without proper examination and cross-examination. The Tribunal also noted that the inputs were recorded in the books of accounts and used in manufacturing final products cleared on payment of duty. It was emphasized that the Revenue failed to establish that the inputs were not received by the appellant. Therefore, in the absence of proper investigation and corroborative evidence, the denial of Cenvat credit was not sustainable.

3. Denial of Cenvat Credit Due to Incorrect Vehicle Numbers Mentioned in Invoices:

The Cenvat credit of Rs. 1,23,65,293/- was denied on the ground that the vehicle numbers mentioned in the invoices were not capable of transporting the goods. The Tribunal found that there were apparent mistakes in the invoices, such as incorrect vehicle numbers, which were not sufficient grounds to deny Cenvat credit. The Tribunal highlighted that the investigation conducted by the Revenue was deficient, as incorrect vehicle numbers were verified. Additionally, the photocopies of GRs (Goods Receipts) relied upon by the Revenue were not admissible evidence as per the principles laid down by the Hon’ble High Court of Punjab and Haryana. The Tribunal held that the photocopies of GRs produced by the appellant, having endorsements in their favor, were to be taken as admissible evidence. Consequently, the denial of Cenvat credit based on incorrect vehicle numbers was not justified.

Conclusion:

The Tribunal concluded that the impugned orders denying Cenvat credit of Rs. 2,72,64,532/- and Rs. 1,23,65,293/- were not sustainable. The following orders were passed:
- Cenvat credit of Rs. 11,78,604/- was denied and recoverable along with interest, which the appellant had already paid. A penalty of 25% of the duty confirmed was imposed.
- Cenvat credit of Rs. 3,96,29,825/- was held to be admissible.
- No penalty was imposable on the Director of the appellant.

The appeals were disposed of in these terms.

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