Court Allows Cenvat Credit for Steel Manufacturer Due to Insufficient Evidence from Revenue, Granting Appeal and Relief.

The court set aside the order denying Cenvat credit to the appellant, a manufacturer of steel products, for the period January 2015 to June 2017. The Revenue's claim that the appellant did not receive goods and only moved invoices was refuted by the appellant with transport receipts. The court found insufficient evidence from the Revenue to prove non-receipt of goods, noting the lack of investigation into dealers and transporters. Consequently, the appellant was entitled to the Cenvat credit, and the appeal was allowed with any consequential relief.

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Issues involved:
The denial of Cenvat credit on inputs for the period January 2015 to June 2017 based on the allegation that goods were not received by the appellant and only invoices were moved.

Summary:

Issue 1: Denial of Cenvat credit on inputs

The appellant, a manufacturer of Cast Steel GM Balls and Forged Steel GM Balls, had procured inputs and taken Cenvat credit based on invoices issued by first and second stage dealers. An audit revealed that the manufacturer of the goods was non-existent, leading to the denial of Cenvat credit. The Revenue alleged that since the manufacturer had not paid duty since January 2013, the appellant could not have received the goods. A show cause notice was issued, and the demand was confirmed, denying Cenvat credit along with interest and penalty.

Judgment:
The appellant contended that they had indeed received the inputs from the dealers, and duty had been paid on the final products manufactured. They provided transport receipts as evidence of goods received, and no investigation was conducted with the dealers or transporters. The Revenue's presumption of a paper transaction was refuted, as they failed to prove that the appellant did not receive the goods against the invoices. The Cenvat credit cannot be denied without proper evidence.

Issue 2: Existence of the manufacturer and payment of duty

The authorized representative supported the denial of Cenvat credit, stating that the manufacturer's non-existence breaks the chain, and no duty was paid against the invoices. The appellant was accused of availing credit based on cenvatable invoices without actual receipt of inputs due to the non-existence of the manufacturer.

Judgment:
After hearing both sides and examining the records, it was found that the appellant had received goods from the dealers and complied with the Cenvat Credit Rules by paying duty. The lack of investigation at the dealer level and uncertainty regarding when the manufacturer became non-existent raised doubts. The benefit of doubt favored the appellant, as the Revenue failed to establish non-receipt of goods against the invoices. Therefore, the appellant was deemed entitled to take Cenvat credit on the invoices showing payment of duty.

Conclusion:
The impugned order denying Cenvat credit was set aside, and the appeal was allowed in favor of the appellant with consequential relief, if any.

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