2025 (7) TMI 1408 - AT - Central Excise

Revenue's appeal denied for wrongful CENVAT credit denial under lack of investigation and evidence

The CESTAT upheld the Commissioner (Appeals) decision dismissing the Revenue's appeal regarding denial of CENVAT credit. The credit was claimed for raw ... CENVAT Credit - credit availed without actually receiving the raw materials - entire case is based just on the ground that the vendor is non-existent - HELD THAT:- It is found that the Central Excise Registration was cancelled much latter after all the transactions have taken place between the appellant and dealer. It ia also found that the Department has not brought in any cogent evidence to the effect that the appellant failed to receive the raw materials or account for the same in their Books of Account. The Commissioner (Appeals) has given a considered and detailed finding holding that ' It is not the case of the department that appellant has not received the goods. In fact, no investigation has been conducted at the end of the appellant to ascertain they have received the goods or not. Revenue has not made any investigation at the end of the manufacturer supplier of the goods. No investigation was conducted at the transporter of the goods or at the premises of the appellant to reveal the truth. No cross examination of the registered dealer was granted to the appellant to reveal the truth. In these circumstances, Cenvat credit cannot be denied to the appellant on the basis of the deficient investigation.' As per the factual details discussed, there are no reason to interfere with the considered decision of the Commissioner (Appeals). Accordingly, there are no merits in the appeal filed by the Revenue. The appeal stands dismissed. ISSUES: Whether Cenvat Credit can be denied on the ground that the registered dealer supplying raw materials was found to be non-existent at the registered premises.Whether the absence of the dealer's physical godown or premises justifies denial of Cenvat Credit without corroborative evidence of non-receipt of goods.Whether the Revenue's demand for recovery of Cenvat Credit is barred by limitation (time bar) in respect of transactions during 2011-2014.Whether mere issuance of invoices by a dealer without actual supply of goods can be presumed without any investigation or corroborative evidence. RULINGS / HOLDINGS: The denial of Cenvat Credit solely on the basis that the dealer was non-existent at the registered premises is not sustainable in the absence of cogent or credible evidence showing non-receipt of goods by the appellant.The absence of a godown or physical premises of the dealer cannot be a ground for denial of credit when the appellant has accounted for receipt of materials, made payments through banking channels, and reflected the transactions in statutory records.The demand raised by the Revenue for transactions between 2011 and 2014 is time barred, as the Show Cause Notice was issued after the limitation period, and the appellant's transactions were properly recorded and supported by documentary evidence.Presumption of non-supply or paper transactions cannot be made on assumptions or presumptions without any investigation, enquiry, or corroborative evidence such as verification with vehicle owners, staff, or cross-examination of the dealer. RATIONALE: The Court applied the principle that 'once a buyer of inputs receives invoices of excisable item unless factually it is established to the contrary, it will be presumed that when payments have been made in respect of those inputs on the basis of invoices the buyer is entitled to assume that the excise duty has been / will be paid by the supplier on the excisable inputs.'The decision relied on precedent holding that it is 'most unreasonable and unrealistic to expect the buyer of such inputs to go and verify the accounts of the supplier or to find out from the department of central excise whether actually duty has been paid on the inputs by the supplier.'The Court noted the absence of any 'cogent or credible evidence' or investigation by the Revenue to establish that goods were not received or payments were not made, emphasizing that denial of Cenvat Credit requires more than 'assumptions and presumptions.'The Court recognized that the dealer's registration cancellation occurred after the transactions, and that the appellant had complied with statutory requirements including recording transactions in RG 23A Part I and II and making payments through banking channels.The Court referred to prior tribunal and High Court rulings which held that deficient investigation and lack of inquiry into receipt of goods or payment preclude denial of credit.The time bar argument was accepted based on the date of issuance of the Show Cause Notice relative to the transaction dates, consistent with limitation principles under relevant statutes.