TaxTMI 
TaxTMI 
2026 (8) TMI 641
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....e held to be inadmissible and ordered to be recovered along with applicable interest. By the said impugned order, penalty of Rs.2,00,88,682/- was also imposed upon the appellant-company under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Further, penalty of Rs.5,00,000/- was imposed upon Shri Rakesh Kumar Sinha, Authorized Signatory of the appellant-company (hereinafter referred to as the appellant no. 2), under Rule 26 of the Central Excise Rules, 2002 on the allegation that he was fully aware of, and actively associated with the alleged fraudulent availment of inadmissible CENVAT Credit by the appellant-company. 1.1. As both these appeals involve substantially identical questions of fact and law and emanate from the very same adjudication proceedings, they were heard together and are being disposed of by this common order. 2. The facts, in brief, are that pursuant to a follow-up investigation, officers of the Anti-Evasion Unit of the erstwhile Durgapur Commissionerate conducted a search at the factory premises of the appellant-company on 21.08.2015 and called upon it to furnish month-wise details of CENVAT Credit availed....
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....ting to Rs.37,891/- (inclusive of cesses) towards Goods Transport Agency (GTA) services purportedly utilised for transportation of such inputs. According to the Revenue, the GTA credit, being intrinsically linked with the alleged non-existent movement of inputs, was equally inadmissible. 6. Accordingly, a Show Cause Notice dated 03.05.2017 came to be issued proposing recovery of CENVAT Credit amounting to Rs.2,00,50,791/- on inputs and Rs.37,891/- towards GTA service for the Financial Years 2012-13 and 2013-14, together with applicable interest thereon, besides proposing imposition of penalties upon the appellant-company and the appellant no. 2 under the relevant provisions of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the Central Excise Rules, 2002, invoking the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944. 6.1. The appellants contested the proceedings by filing a reply to the aforesaid Show Cause Notice and participating in the adjudication proceedings. 6.2. However, the ld. adjudicating authority, vide the impugned Order-in-Original dated 28.03.2018, confirmed the entire demand of CENVAT Credit of Rs.2,00,50,791....
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....nt has neither undertaken any physical verification of the factory nor produced any documentary evidence to establish nonreceipt or diversion of the inputs. The transporters' invoices, journals maintained supplier-wise and transporter-wise and other supporting records were also furnished before the adjudicating authority but were not duly considered. (v) That the reliance placed by the Revenue solely upon the VAHAN portal data is misconceived, such data being merely corroborative in nature and incapable, by itself, of establishing nonmovement or non-receipt of goods in the absence of independent corroborative evidence. Reliance in this regard was placed upon, inter alia, the decisions in Super Shakti Metaliks Pvt. Ltd. v. Commissioner of CGST & Central Excise, Bolpur [Excise Appeal Nos. 77010 of 201, 77216 of 2018 and 77313 of 2018 - CESTAT, Kolkata] and Steel Crackers Pvt. Ltd. (Unit-II) v. Commissioner of Central Tax, Howrah Commissionerate [Excise Appeal No. 76033 of 2018 with Excise Appeal Nos. 76040 and 7641 of 2018 - CESTAT, Kolkata] (vi) That the demand is, in any event, barred by limitation, the appellant having regularly maintained statutory records a....
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.... (d) In the aforesaid circumstances, the Ld. Adjudicating authority has rightly concluded that the appellant-company had availed CENVAT credit on inputs which had never been received in its factory, and consequently, the CENVAT credit availed on the corresponding GTA services was also equally inadmissible. 8.1. The Ld. Departmental Representative, therefore, prayed for dismissal of both the appeals and for affirmance of the impugned Order-in-Original. 9. Heard both sides and perused the documentary evidence placed on record. 10. Having heard the learned representatives appearing for both sides at length and having carefully considered the records of the case, we find that the entire case of the Revenue proceeds on the allegation that the appellant-company had availed CENVAT Credit on inputs purportedly not received in its factory and, consequently, had also irregularly availed CENVAT Credit of service tax paid on GTA services. The foundation of such allegation principally rests upon the particulars of vehicle numbers reflected in certain invoices, as verified from the VAHAN portal viz. www.vahan.nic.in, coupled with certain communications allegedly received from a hand....
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....ndisputed manufacture and clearance of finished goods reflected in the statutory returns filed by the appellant. 13. We further find that the evidentiary basis adopted by the Revenue suffers from serious infirmities. The Show Cause Notice relies substantially upon data retrieved from the VAHAN portal. However, the appellant has correctly pointed out that in several instances the portal itself reflected remarks to the effect that either the vehicle number was incorrect or that the vehicle particulars had not been digitised. We concur with the submission that the data reflected on the VAHAN portal cannot be said to immune from technical inaccuracies or deficiencies, so as to dispense with the requirement of independent verification. The same cannot thus, in our view, form the sole basis of such allegations as levelled in this case. The assumption drawn by the Revenue that the vehicles in question were incapable of transporting the impugned goods, therefore, does not appear to be well-founded. It is also observed that in certain cases, without undertaking any further verification from the concerned registering authorities, transporters or suppliers, the Department proceeded to trea....
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....hicle particulars and assumptions regarding transportation had come up for consideration before this Tribunal in a catena of decisions. In the case of Hindusthan Engineering & Industries Ltd. & ors. v. Commissioner of Central Excise, Kolkata-IV [Final Order Nos. 76117 to 76122 of 2025 dated 02.05.2025 in Excise Appeal No. 76580 of 2014 & connected appeals - CESTAT, Kolkata], under identical facts and circumstances, the Tribunal has observed as under: - "9. At the very outset, we cannot help but notice that there is no statement from the registered supplier cum dealer in the instant case i.e. M/s Vikash Industrial Corporation (proprietor: Sri Dipak Kumar Nathani), denying supply of goods to the appellant-company. If such be the admitted position, and we say so after carefully going through the statement of Sri Dipak Kumar Nathani dated 05.02.2013, then we find it difficult to hold that the appellant-company had been required to go behind the covering documents issued by the said M/s. Vikash Industrial Corporation under the provisions of the Central Excise Act, 1944 read with the Central Excise Rules, 2002. It was brought to our notice by the Learned Sr. Advocate for the app....
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....The first submission of the appellant is that while the demand is in account of 245 transactions, the investigation was taken up for only 67 transactions. On a specific query to the AR as to whether any verification was taken for all the transactions or not, he submits that as per the available records, there is nothing to indicate that in respect of 178 invoices, any investigation was taken up to carry forward the allegation of non-receipt of these goods. We are of the view that in such cases, the Revenue is required to be very thorough since the demand is based on each and every invoice. The allegation can sustain only on such invoices on which the investigation has taken place and non-receipt if conclusively proved. The investigation in respect of 67 invoices [about 27% of the total 245], even wherein the appellant has pointed several anomalies, cannot be generalized to simply interpolate same allegation for the balance 178 [about 73%] in order to make the demand. This is serious a flaw in the investigation process. Without doubt this action of the Revenue clearly vitiates the proceedings in respect of these 178 Invoices. Hence, we do not find any legal provision for confirmatio....
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.... 22. We also find considerable force in the arguments of the appellant about the time bar aspect in this case. The appellant is an assessee with the Dept. They have been taking the Cenvat Credit and also filing their Returns. It is not the case of the Dept. that any private records have been recovered towards the cash transactions. The Dept. has not brought in any evidence to the effect that any suppression has taken place from the appellant's side. Hence, we hold that the confirmed demand for the extended period is legally sustainable on account of time bar. Hence, we allow the appeals even on account of limitation." 10.3. The Hon'ble High Court at Gujarat, in the case of Commissioner v. Motabhai Iron and Steel Industries [2015 (316) E.L.T. 374 (Guj.)] has held as under: - "13. From the evidence on record, it appears that the above demands were based upon the statements of transporters or drivers of the trucks which were not corroborated by any evidence. Under the circumstances, the Tribunal was justified in holding that only on the basis of third party statements, such demand cannot be made. Moreover, as rightly pointed out by the Tribunal, no investigation ha....
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....d on records mentioned at one of his offices situated at Sagar Kuti Chauraha. The original authority has recorded that vehicles which transported the duty paid inputs were deployed by Shri Ravikant Dwivedi Director of M/s. Saral Logistics System Pvt. Ltd. from his office situated in Rama Chauraha. The question regarding the transportation of raw material has been discussed at length by the original authority (Paras 23, 24 of the impugned order). 7. Further, the original authority also recorded that the freight has been regularly paid on cash payment voucher which are acknowledged by the transporter. The list of such vouchers was also recorded in the impugned order. The original authority also examined certain discrepancies in the vehicle numbers. 8. We find no infirmity in the reasoning and conclusion of the impugned order. The investigation by the Revenue could not in any manner bring out the non-receipt of duty paid raw materials or the bogus nature of all the transactions. In the absence of such evidence, it will not be legally tenable to deny the credit based piece meal/sketchy evidence, without corroboration." 10.4.1. We observe that the above order ....
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....duced their final products in the event of not having received the inputs in their factory. f. It is noticed that M/s. MAL have paid the amount for the purchase of inputs to M/s. Indo Micro Nutrients and M/s. Inter Metal by crossed cheques/DDs. In the event of not having received any inputs, nothing has been brought on record to show as to what happened to the amount so paid by M/s. MAL. g. M/s. Sujoy Transport Company which later became M/s. Saral Logistics Pvt. Ltd. had four offices. But the investigation did not go through the records of other offices other than located at Sagore Kuti Chauraha. 6. The appeal by Revenue relies on the submission of Shri Atlant Dwivedi Proprietor of M/s. Sujay Transport Company. We find that the submission is based on records mentioned at one of his offices situated at Sagar Kuti Chauraha. The original authority has recorded that vehicles which transported the duty paid inputs were deployed by Shri Ravikant Dwivedi Director of M/s. Saral Logistics System Pvt. Ltd., from his office situated in Rama Chauraha. The question regarding the transportation of raw material has been discussed at length by the original authority (Pa....
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....e suppliers for the raw-material allegedly supplied, as also the transportation charges made by the recipient of the raw material. The Learned Commissioner (Appeals) has held that "the contention of making payments through account pay checks or RTGS also did not hold good" and observed that M/s. Gagan Ferrotech Ltd. was a regular customer of the supplier company and adjustment of such payments against other supplies was not a very difficult task. I am afraid that this assumption cannot be the underlying basis to sustain a grievous charge of mis-declaration and non-receipt of raw material, on which undoubtedly Cenvat Credit has also been availed. It is noted that no discrepancy at even a single place with regard to incorporation of the goods in various accounts like RG-23 A Part I or Part II or the DSA or Raw material register or even ER-1 return filed have been pointed out or ascertained by the revenue. Also no case of short receipt or excess stocks of finished goods or any other transactional evidence has been placed on record in support by the Revenue vis-à-vis the banking transactions. This leads to the inevitable conclusion that the claims of the revenue are completely u....
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....d inputs had in fact been sold and dispatched to the appellant-company. Equally, no material has been brought on record to establish that the suppliers themselves had disowned the transactions or denied having effected the supplies covered by the impugned invoices. Such omission, in our considered opinion, assumes considerable significance, for the Revenue cannot selectively investigate only one limb of the alleged transaction while completely ignoring the other, particularly when the allegation itself is that the supplies were altogether fictitious. 17.1. This omission assumes even greater significance when viewed in the backdrop of the manufacturing activities carried on by the appellant-company during the material period. The records reveal, as also recorded by the ld. adjudicating authority in the impugned order, that the appellant-company manufactured 70,174.690 MT of M.S. Ingots and 85,465.500 MT of M.S. TMT Bars during the financial years 2012-13 and 2013-14. For such manufacture, the appellant has placed on record contemporaneous statements reflecting consumption of 83,174.265 MT of Sponge Iron, Pig Iron and M.S. Scrap for manufacture of ingots and 1,22,355.325 MT of M.S....
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....dulent availment of credit must be established by clear, positive and convincing evidence, and not by drawing adverse inferences from procedural deficiencies alone. The Revenue having failed to discharge the burden cast upon it in this regard, the benefit of doubt must necessarily accrue to the appellants. The submissions advanced by the learned Authorised Representative, therefore, do not commend acceptance and are accordingly rejected. 19. Even otherwise, we find substantial merit in the contention advanced on behalf of the appellants that the impugned proceedings are barred by limitation. It is an admitted position that the appellant-company had been regularly filing the prescribed statutory returns under the law, as applicable, wherein the availment of the impugned CENVAT credit stood duly reflected, thereby making all relevant particulars available to the departmental authorities in the ordinary course. Furthermore, the appellant-company has consistently placed on record contemporaneous documentary evidence including transport documents, transporters' invoices, carriage inward accounts, ledger accounts evidencing payments to transporters and suppliers, raw material purc....