CENVAT credit recovery from dealer held unsustainable where buyers denied availing credit and Revenue produced no rebuttal.

Recovery of alleged wrongly passed CENVAT credit through DEPB debit was held unsustainable against a dealer when the recovery provisions under Rule 12 of the CENVAT Credit Rules, 2002 and Rule 14 of the CENVAT Credit Rules, 2004 apply to recovery from the manufacturer, or in Rule 14, from the manufacturer or provider of output service. The dealer had issued invoices, but the purchasers denied taking or using the credit, and the Revenue produced no material to rebut those denials. On that factual basis, the demand against the dealer-appellant was not maintainable and the appeal succeeded.

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Issues: Whether CENVAT credit allegedly passed on by the first stage dealer/importer through DEPB debit could be recovered from the dealer under the CENVAT Credit Rules, 2002 and 2004.

Analysis: The recovery provisions under Rule 12 of the CENVAT Credit Rules, 2002 and Rule 14 of the CENVAT Credit Rules, 2004 contemplate recovery of wrongly taken or utilised credit from the manufacturer, and in the case of Rule 14, from the manufacturer or provider of output service, as the case may be. On the facts, the appellant acted as a dealer, while the purchasers who received the invoices denied availing or utilising the credit. No material was produced by the Revenue to rebut those denials. In that situation, recovery from the dealer-appellant was held to be unsustainable.

Conclusion: The recovery demand against the dealer-appellant could not be sustained and the appeal succeeded.

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