2015 (6) TMI 1271 - AT - Central Excise

Levy of penalty u/r 26 of Central Excise Rules 2002 - credit denied on the premise that M/s. Sidh Balak Enterprises has made a statement that they are issuing invoices and not supplying the goods - paper transaction - HELD THAT - In this case statement of appellant has not been recorded but the statement of buyer of the appellant is recorded wherein he has admitted that they have received the goods against the invoices issued by M/s. Sidh Balak Enterprises. To contravene to said statement Revenue was required to find out whether the manufacturer supplier has supplied the said goods or not. Moreover no investigation was conducted at the end of transporter to ascertain the fact that transporter has transported the goods from manufacturer supplier to deliver the goods to the appellant. The show cause notice was not required to be issued on the presumptions and assumptions. There should be corroborative evidence to prove the allegation as there is no corroborative evidence to prove the allegation against the appellant therefore demand confirmed in the impugned order are not sustainable and it cannot be alleged that there was merely a paper transaction on which the appellant has taken the Cenvat credit. The impugned order is set aside - appeal allowed.

Summary

The appellant, a 2nd stage dealer, challenged the imposition of a Rs. 50,000 penalty under Rule 26 of the Central Excise Rules, 2002, for availing Cenvat credit on invoices issued by M/s. Sidh Balak Enterprises, who allegedly issued invoices without supplying goods. The lower authorities denied Cenvat credit, holding the transactions to be "paper transactions," and demanded duty with interest and penalty.The appellant contended that no statements from the transporter or manufacturer supplier were recorded to verify receipt of goods, and thus Cenvat credit denial was unjustified. The Tribunal noted that while M/s. Sidh Balak Enterprises admitted to issuing invoices without supplying goods in another case, no corroborative evidence was produced against the appellant. The statement of the appellant's buyer confirmed receipt of goods, and no investigation was conducted on the transporter or manufacturer supplier to verify the supply chain.The Tribunal held that the show cause notice and penalty could not rest on "presumptions and assumptions" without corroborative evidence. It emphasized the necessity of evidence beyond mere allegations to deny Cenvat credit. Consequently, the Tribunal set aside the impugned order, stating the demand and penalty were "not sustainable," and allowed the appeal with consequential relief.