CESTAT Chandigarh Upholds Denial of Cenvat Credit on Invoices, Confirms Duty Demand.

CESTAT Chandigarh upheld the denial of Cenvat credit on specific invoices, confirming duty demand, interest, and penalties on the respondents. However, the penalty on M/s DR Polymers was set aside as the company lacked knowledge or benefit from the activity.

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Issues:
Revenue's appeal against setting aside demand confirmed by adjudication order.

Analysis:
The case involves a dispute where the respondents, manufacturers of plastic moulds, were availing Cenvat credit on inputs. Following a search in their factory premises, it was alleged that they had received only cenvatable invoices without receiving the actual goods, leading to show cause notices being issued to deny Cenvat credit, demand duty with interest, and impose penalties. The adjudicating authority upheld the denial of Cenvat credit and confirmed the duty demand and penalties. The respondents appealed to the Ld. Commissioner (Appeals), who set aside the adjudication orders. The Revenue then appealed to CESTAT Chandigarh.

The Revenue contended that the Ld. Commissioner (Appeals) overlooked statements of drivers indicating that goods were not transported to the respondents, thus justifying denial of Cenvat credit. On the other hand, the respondents argued that the drivers admitted to transporting goods and providing payment vouchers as evidence, supporting their claim for Cenvat credit.

After hearing both parties, CESTAT Chandigarh found that the Revenue's case rested on the claim that respondents did not receive goods but only invoices, based on statements of certain drivers. However, the respondents presented vouchers certifying receipt of inputs, countering the drivers' statements. In specific instances involving refrigerated vans unsuitable for transporting goods, Cenvat credit was denied on particular invoices. Additionally, in cases where owners provided evidence of goods movement, Cenvat credit was also denied.

Consequently, CESTAT Chandigarh upheld the denial of Cenvat credit on specific invoices, confirming duty demand, interest, and penalties on the respondents. However, regarding M/s DR Polymers, found to be involved in issuing invoices, the penalty was not imposed as the company lacked knowledge or benefit from the activity, in line with a precedent. Therefore, the penalty on M/s DR Polymers was set aside.

In conclusion, CESTAT Chandigarh ruled to deny Cenvat credit on certain invoices, confirm duty demand, interest, and penalties on the respondents, while setting aside the penalty on M/s DR Polymers. The appeals were disposed of accordingly.

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