TaxTMI 
TaxTMI 
2022 (2) TMI 614
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....ndent as also its Director. 2. The respondent was engaged in the manufacture of M.S. Ingot and Bars and availed CENVAT credit claiming that the inputs were used for manufacture of the final products. 3. A show cause notice dated 23.11.2016 was issued to the respondent mentioning therein that it had availed CENVAT credit amounting to Rs. 86,38,805/- in respect of inputs (scrap) used by them in the manufacture of final product. The show cause notice mentions that the credit had been used fraudulently on fake invoices received without receiving the goods from the so-called manufacturers and dealers namely: M/s Aditya Enterprises; M/s Shree Ram Engineering & Casting; M/s M. K. Engineering Works; and The firms namely M/s Chakradhari Metal Co., Jamshedpur, M/s L.S. Construction, Jamshedpur and M/s Tirupati Associates, Jaipur abetted with the manufacturing units for facilitation of undue CENVAT credit to appellant by issuing fake bills without supplying the goods. The transporters namely M/s Transport Corporation of Rajasthan, Jaipur, M/s Goyal Parivahan, Jaipur, and M/s Roop Laxmi Transport Company, Jaipur also abetted by issuing bilties on commission basis without rece....
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.... summarised as under for the sake of ready reference." (emphasis supplied) 6. Thereafter, the Additional Commissioner examined the statements of Shri Sudarshan Singh, proprietor of M/s Aditya Enterprises, Nitish Pandey, partner of Shri Ram Engineering & Casting, Ajay Kumar Singh, partner of L.S. Construction, Satish Pandey, proprietor of Bajarang Steel Tranders and Jeetu Agarwal proprietor of Tirupati Associates and concluded that all the firms were bogus and were not engaged in manufacturing or trading activity or sales of goods and were only issuing invoices to pass on CENVAT credit. In such circumstances, the CENVAT credit availed by the respondent was denied. 7. The respondent and its Director filed appeals before the Commissioner (Appeals), who by order dated 16.10.2018, allowed the appeals and set aside the order passed by the Additional Commissioner. The relevant portions of the order passed by the Commissioner (Appeals) are reproduced below: "4.1. Further, at the time of personal hearing held on 08.10.2018, they have submitted that appellant purchased the goods after payment of duty and though it is a fact that the goods were non-duty paid but ....
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....that the appellant received material though the material received was either before receiving the invoice or after receiving the invoices, but it does not mean that the material mentioned in the invoices was not received, not utilized/consumed for the manufacture of final products on which duty had been paid. There is also no case of the department that the appellant was not entitled to take credit of duty paid on inputs which were admittedly used for manufacture of final products on which duty was paid. The case of the department is only that the invoices were not received with the material and the material was not received in the trucks the number of which was mentioned in the above said invoices. I find that for long distance, it is not necessary that the direct truck is available and goods loaded in the truck are not transshipped. It is also a fact on records that the truck number was not mentioned by the GTA service provider but was mentioned by the person who raised the invoices, but all these facts do not change the basic question that the invoices were not fake, appellant was not a party in the fraud there was no involvement of appellant in the conspiracy to issue invoices ....
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.... Name of the Firm/Company that issued the invoices Number of invoices Amount of CENVAT credit passed on and availed (in Rs.) Period involved 1. Aditya Enterprises Bokaro, Jharkhand 31 1832249/- 11/12 to 12/05 2. Shree Ram Engineering & Casting, Jamshedpur 34 2089793/- 11/12 to 12/05 3. M.K. Engineering Works, Jamshedpur 57 3114664/- 11/11 to 12/05 4. Tirupati Associates, Jaipur 21 1602099/- 13/09 to 13/12 Total 143 86,38,805/- 12. The following facts emerge from the order passed by the Additional Commissioner in respect to each of the firm/companies that issued the invoices: "(1) Aditya Enterprises Bokaro (i) That investigation found that the premises of M/s Aditya Enterprises was not in existence; (ii) That no manufacturing activities were carried out at the premise of M/s Aditya Enterprises and they had filed NIL returns during the said period; and (iii) Sudarshan Singh, proprietor of M/s Aditya Enterprises in his statement dated 24.04.2014 stated that since August 20....
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....ealer No. of invoices Amount of CENVAT credit involved.(Rs.) 1. M/s Maa Chhinnmastika Cement & Ispat, Ramgarh - 9 9,28,324/- 2. M/s Autolite India Ltd, Jaipur - 5 88,426/- 3. M/s Ganesh udyog, Baramundi M/s L.S.Construction 3 2,44,914/- 4. M/s Aditya Enterprises, Bokao M/s Chakardhari Metal Co 4 3,40,425/- Total 21 16,02,099/- (ii) Location of M/s Ganesh Udyog & M/s L.S. Construction were not available at given addresses; (iii) Shri Ajay Kumar Singh partner in L.S. Construction in his statement dated 30.07.2014 stated that the firm is registered as dealer and the activity of the firm is looked after by Sh. Nitesh Pandey who issued the invoices; (iv) Shri Satish Pandey proprietor in Bajrang Steel in his statement dated 30.09.2014 stated that they are registered as dealer and purchase fake bills of sponge iron and scrap from M/s Aditya Enterprises, Shri. Ram Engineering & Casting, M/s Ganesh Udyog etc. and on the basis of these bills they issue fake invoices in order to pass on CENVAT credit. All these activities were carried out by Nitish Pan....
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....by the manufacturer/dealers with the invoices. 19. Under rule 4(1) of the Credit Rules, CENVAT credit of inputs to be used in the manufacture of final product is allowable to the manufacturer only on receipt of the goods along with invoices in the factory of manufacturer. Rule 4(5) of the Credit Rules also casts a burden of proof regarding the admissibility of the CENVAT credit upon the manufacturer taking such credit. The respondent failed to comply with the above provisions of the Credit Rules. It was, therefore, not entitled to take CENVAT credit amounting to Rs. of Rs. 86,38,805/- on the strength of invoices which were not genuine. 20. The Commissioner (Appeals), as can be seen from the order, even after accepting that the invoices had been issued fraudulently still proceeded to grant relief to the respondent by holding that they were not bogus or fake and, therefore, CENVAT credit taken on the basis of such invoices are admissible. This finding is contrary to the factual position emerging from the records. M/s Aditya Enterprises was not in existence; M/s Shree Ram Engineering & Casting was not a manufacturing unit and in fact was engaged in construction of re....