Appellant vindicated in Cenvat credit case, acted in good faith, order for recovery overturned The appellant, a manufacturer, faced allegations of taking Cenvat credit based on fake invoices. Despite delays in tax payments by the commission agent, ...
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Appellant vindicated in Cenvat credit case, acted in good faith, order for recovery overturned
The appellant, a manufacturer, faced allegations of taking Cenvat credit based on fake invoices. Despite delays in tax payments by the commission agent, it was found that the appellant had acted in good faith and correctly availed the credit. As a result, the proceedings against the appellant were deemed unsustainable. The initial order for recovery of Cenvat credit, interest, and penalty was overturned, and the appeal was allowed in favor of the appellant.
Issues Involved: - Appellant taken Cenvat credit on the basis of fake invoices - Entitlement to Cenvat credit amounting to Rs. 29,02,989/- - Imposition of penalty under Section 11AC of the Act r/w Rules 15(2) of the Cenvat Credit Rules, 2004
The appellant, a manufacturer of various goods, availed Cenvat credit on input/services during their activity. An audit revealed that the appellant took credit on invoices from a commission agent, M/s Agrawal Structure Mills Pvt Ltd, without service tax being paid. A show cause notice was issued, dropped initially but reinstated by the Commissioner (Appeals) for recovery of Cenvat credit, interest, and penalty. The appellant challenged this order.
The appellant's counsel argued that since the commission agent paid service tax on the invoices, the appellant should not be denied Cenvat credit. It was contended that the appellant took credit in good faith based on the agent's invoices, and if the agent paid the tax, the appellant should not be penalized. The counsel sought to set aside the Commissioner (Appeals) order.
On the other hand, the authorized representative supported the impugned order's findings that the appellant used fake invoices to claim Cenvat credit for services not received.
After hearing both parties and reviewing the records, it was established that the appellant correctly availed Cenvat credit based on the agent's invoices, even though the tax payment was delayed. Thus, the proceedings against the appellant were deemed unsustainable.
Consequently, the impugned order was overturned, and the appeal was allowed with any necessary relief.
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