2023 (6) TMI 1152 - AT - Central Excise

Tribunal overturns order against steel plant for alleged Cenvat credit misuse

M/s. Jai Balaji Industries Limited, Unit-III Versus Commissioner of Central Excise, Bolpur

M/s. Jai Balaji Industries Limited, Unit-III Versus Commissioner of Central Excise, Bolpur - TMI Issues Involved:1. Whether the Appellant availed wrongful and irregular Cenvat credit based on fake invoices.2. Whether the Appellant received the capital goods from M/s. Saha Industries.3. Whether the demand for duty is barred by limitation.Summary:1. Wrongful and Irregular Cenvat Credit:The case revolves around the Appellant, an integrated steel plant, accused of availing wrongful and irregular Cenvat credit on capital goods purchased from M/s. Saha Industries. The department alleged that M/s. Saha Industries issued fake invoices without actual delivery of goods, leading to wrongful Cenvat credit by the Appellant. The investigation revealed that M/s. Saha Industries had poor infrastructure and lacked the capacity to manufacture the sophisticated machinery shown in their invoices. The Commissioner upheld these allegations, stating that the onus to verify the supplier's genuineness lies with the recipient as per Rule 9 of the Cenvat Credit Rules, 2004.2. Receipt of Capital Goods:The Appellant contended that they duly received and installed the machinery, supported by statutory records, bank statements, and ER-1 returns. The Commissioner, however, concluded that the goods were not manufactured by M/s. Saha Industries, but did not establish that the Appellant received the goods from an alternate source. The Tribunal found no discrepancy on the Appellant's part and emphasized that the burden of proof lies with the department, which failed to prove that the Appellant received goods from another source. The Tribunal relied on the Supreme Court judgments in Uniworth Textiles Ltd and Kishanchand Chellaram, which state that the burden of proof is on the person making the allegation.3. Barred by Limitation:The Tribunal addressed the issue of limitation, noting that the period involved was March 2007 to October 2007, and the show cause notice was issued on 10-03-2010. The Tribunal referred to the Gujarat High Court judgment in Prayagraj Dyeing & Printing Mills Ltd, which held that extended limitation cannot be invoked if the credit was availed on invoices from a duly registered manufacturer, even if the supplier was later found to be non-existent. The Tribunal concluded that there was no evidence of fraud by the Appellant and thus, the demand for duty was barred by limitation.Conclusion:The Tribunal set aside the impugned order on both merits and limitation grounds, allowing the appeal with consequential relief. The Tribunal emphasized that the department failed to prove any discrepancy on the Appellant's part and that the burden of proof lies with the department. The Tribunal also highlighted that the extended period of limitation could not be invoked in this case.