2016 (11) TMI 826 - AT - Central Excise

Denial of CENVAT credit - supplier non-existent - issuance of invoice only and not goods - Held that - M/s S.K. Garg & Sons was registered dealer during the impugned period and all the ER-I returns were filed by M/s S.K. Garg & Sons which were accepted by the department. Therefore, in the absence of any corroborative evidence to show that the appellants have not received the goods, it cannot be alleged against the appellant that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer - reliance placed on the decision of the case of Commissioner of Central Excise Ludhiana Versus M/s. Dhawan Steel Industries 2015 (10) TMI 1325 - CESTAT NEW DELHI where it was held that Invoices issued by M/s. S K Garg and sons giving details of transporters as well as manufacturer supplier of the goods. No investigation was conducted at the end of manufacturer supplier as well as transporter of the goods to reveal the truth. The case has been made against the respondents on the presumption that supplier dealer is not existing firm therefore, there was only paper transaction. Cases cannot be booked merely on the presumption and assumption, there should be corroborative evidence to prove the allegations. In this case, allegation has not been supported with tangible evidence. Therefore, relying on the precedent decision of the Tribunal in the case of M/s Dhawan Steel Industries, I hold that in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the appellants - impugned order set aside - appeal allowed.

Summary

Issues:
Denial of cenvat credit on inputs due to non-existence of supplier M/s S.K. Garg & Sons.

Analysis:
The appellants filed appeals against the denial of cenvat credit on inputs supplied by M/s S.K. Garg & Sons, a dealer found to be non-existent during an investigation. The investigation revealed that the premises of M/s S.K. Garg & Sons were locked, and the godown was non-existent, leading to the cancellation of their registration retrospectively. The appellants had availed cenvat credit on goods purchased from M/s S.K. Garg & Sons, which raised suspicions of receiving invoices without actual goods. A show cause notice was issued, resulting in the denial of cenvat credit, duty demand, interest, and penalty imposition.

The appellants argued that they physically received the goods and no inculpatory statement existed against them. They highlighted the lack of investigation with the transporter or manufacturer/supplier of the goods. The appellants also pointed out that M/s S.K. Garg & Sons had filed ER-1 returns accepted by the department, supporting their claim. Reference was made to the decision of CCE, Ludhiana Vs. Dhawan Steel Industries to bolster their case.

On the contrary, the Departmental Representative contended that M/s S.K. Garg & Sons engaged in issuing fake cenvatable invoices, with no actual storage facility for the goods. The Ld. Commissioner (A) had denied cenvat credit due to delays between invoicing and goods receipt, emphasizing the lack of storage capacity with M/s S.K. Garg & Sons.

After hearing both sides, the Tribunal found that crucial investigations were missing at the end of the manufacturer/supplier or transporter to ascertain the truth. Despite M/s S.K. Garg & Sons being a registered dealer filing ER-I returns accepted by the department, the absence of conclusive evidence regarding goods receipt prevented alleging that the appellants only received invoices. Citing the precedent of M/s Dhawan Steel Industries case, where similar allegations were refuted due to lack of tangible evidence, the Tribunal set aside the impugned order. Relying on previous decisions, the Tribunal allowed the appeal, emphasizing that without investigations at crucial junctures, cenvat credit denial was unwarranted.