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2016 (10) TMI 131 - AT - Central ExciseCenvat demand - no manufacturing activity was noticed by the officers at the time of visit to the factory - partner admitted in his statement that no manufacturing activity took place - no material was purchased by him but cenvat credit was taken on the basis of bills mostly issued by M/s. Jagriti Plastics without receipt of accompanied material - Held that:- from the process of manufacture it is easy to see that the item thinner can easily be made by mixing of various solvents, requiring even no electricity connection. Invoices for purchase of inputs as well as supply of thinners to various buyers were found. As such, it can not be concluded with certainty that no manufacture of thinner has happened in the appellant's factory. To establish that cenvat credit has been taken without the receipt of inputs, Revenue is required to produce positive evidence to the effect. 90% of the inputs are said to have been supplied by M/s. Jagriti Plastics. There is nothing on record to show that investigations having been undertaken against M/s. Jagriti Plastics for supply of material and other suppliers. The financial transactions involved in purchasing inputs from M/s. Jagriti Plastics as well as other suppliers have not been looked into. The most pertinent point to investigate would have been to probe cash flow back from the respondent to the supplier, substantiate the fact of non-receipt of inputs. Revenue's case is totally silent about the sale of finished goods by the respondent. Invoices were found indicating sale of finished goods to various buyers. Therefore, to sustain the allegation of no manufacture, Revenue is expected to undertake verification to establish whether the buyers have received such goods. Likewise financial transaction at the end of the finished products would also be relevant. We find that the investigations are not elaborate and are incomplete and inconclusive. To conclude that the inputs on which cenvat credit has been taken, have not been received in the factory of the assessee, it would be expected from the Revenue to show at least in a few cases, where the inputs have actually been received, if not in the respondent's factory. The respondents have taken the cenvat credit on inputs but have also cleared finished goods on payment of duty. Even though there is no discussion in the orders of the authorities below, we would expect that the cenvat credit availed on the inputs would also have been debited for making payment at the time of supply of finished goods. In such a scenario, the cenvat credit taken would also stand paid back, which could lead to revenue neutral situation. Therefore, we find no reason to interfere with the order of the Commissioner (Appeals) in which demand for recovery of cenvat credit has been set aside. - Decided against the Revenue
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