2024 (1) TMI 881 - AT - Central Excise

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

C.C.E & S.T. -Silvasa Versus Vishal Casteels

CESTAT Ahmedabad upheld the Commissioner's order dismissing allegations of fraudulent Cenvat credit availment against a respondent accused of using fake ... Wrong availment of Cenvat Credit - huge evasions of Central Excise duty - fake Cenvat invoices - HELD THAT:- It is found that during the cross-examination before the adjudicating authority all brokers stated that disputed ship breaking material were supplied and transported to Respondent. Further Ship Breakers units/dealers nowhere admitted /stated that they have not supplied the goods to the respondent - the allegation of the department is based upon assumption and presumption that the ship breaking scrap after clearance from Ship-Breaking yard has been diverted to Re-rolling units. In the present matter not a single Re-rolling mills units who allegedly used the said ship breaking scrap identified by the department. No corroborative evidence produced by the department to show that diversion of the said ship breaking scrap. The Ld. Commissioner has given weightage to all these deficiency in the investigation and held that there is no sufficient evidences to establish fraudulent availment of credit. It is also noticed that in case of LLOYDS METAL ENGINEERING LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [2003 (11) TMI 502 - CESTAT, MUMBAI] it was held that burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld - there are no fault with the discussions and the view taken by the Ld. Commissioner in regard to the issue of alleged fraudulent availment of Cenvat credit. In the disputed matter transportation of the goods was arranged by the Brokers through whom the scrap was purchased by the Respondent. Merely on the ground that the owners of the transport vehicle have denied the transportation to Respondents factory it cannot be concluded that the scrap was not received in the respondent’s factory - the credit availed on the basis of invoices issued by the registered dealer, cannot be denied on the ground that the transporters have admitted the fact of non-transportation of the goods and the addresses of truck owners were found to be fake. The impugned order is upheld and the appeal filed by the Revenue is dismissed. Issues Involved:1. Wrong Availment of Cenvat Credit2. Non-Transportation of Goods3. Validity of Statements and Evidence4. Timeliness of the AppealSummary: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.