Cenvat credit cannot be denied when goods properly recorded and invoices from registered dealers despite fake invoice allegations

CESTAT Ahmedabad upheld the Commissioner's order dismissing allegations of fraudulent Cenvat credit availment against a respondent accused of using fake invoices for ship breaking scrap. The tribunal found insufficient evidence to prove non-receipt of inputs, noting that brokers confirmed supply and transportation to respondent, while no re-rolling mills were identified as actual users of diverted scrap. Despite transporters denying delivery and having fake addresses, the tribunal held that credit cannot be denied when goods are properly recorded in registers and invoices are from registered dealers. The Revenue's appeal was dismissed for lack of corroborative evidence establishing diversion or fraudulent credit availment.

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Issues Involved:
1. Wrong Availment of Cenvat Credit
2. Non-Transportation of Goods
3. Validity of Statements and Evidence
4. Timeliness of the Appeal

Summary:

1. Wrong Availment of Cenvat Credit:
The revenue alleged that the respondent, engaged in manufacturing M.S. Ingot, wrongfully availed Cenvat credit amounting to Rs. 3,40,80,748/- for the period April 2006 to March 2010. The investigation suggested that the respondent received fake Cenvat invoices from Ship Breakers without the physical supply of goods. The Commissioner of Central Excise dropped the demand, which led to the revenue's appeal.

2. Non-Transportation of Goods:
The revenue contended that the ship-breaking scrap was not transported to the respondent's factory but was instead diverted to Re-rolling units. The investigation revealed that many transport firms were non-existent, and no actual transportation of waste and scrap of Iron and Steel took place. The respondent argued that there was no evidence to support the assertion of non-transportation and diversion of goods.

3. Validity of Statements and Evidence:
The revenue relied on statements from brokers, transporters, and vehicle owners, as well as loose papers and documents, to support their case. The respondent countered that these statements were inconsistent, retracted, and not corroborated by concrete evidence. The Tribunal found that the statements and third-party records were insufficient to establish the charge of fraudulent availment of Cenvat credit. The respondent's records of receipt and consumption of inputs were not rebutted by the revenue.

4. Timeliness of the Appeal:
The respondent argued that the appeal was not maintainable as the review order by the Committee of Chief Commissioners was passed beyond the three-month period stipulated in Section 35E(3) of the Central Excise Act, 1944. The Tribunal did not specifically address this issue in the final judgment.

Tribunal's Decision:
The Tribunal upheld the Commissioner's order, stating that the revenue's case was based on assumptions and lacked corroborative evidence. The appeal was dismissed, and the cross objections were disposed of. The judgment emphasized that mere statements without tangible evidence could not substantiate the charge of fraudulent Cenvat credit.

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