10 June 2024


Customs, Excise and Service Tax Appellate Tribunal

Vipul Copper Pvt. Ltd. Vs. C.C.E., Ahmedabad




Burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence

Appellants are engaged in the manufacture of Copper Rods/Wires etc. They were availing of the benefit of Cenvat credit facility. The intelligence was gathered by DGCEI officers and necessary investigation has been initiated against the Appellant. On the basis of facts and evidence gathered, it was alleged that the Appellant had availed the credit fraudulently without receipt of inputs. Accordingly, the SCN was issued which was culminated in the adjudication order whereby the demand of Cenvat credit along with interest and penalty was confirmed and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Co-Noticees. Being aggrieved, Appellants filed appeals before the Commissioner (Appeals), who has dismissed the same vide impugned Order-In-Appeal.

In Cenvat Credit Rules, 2004, some minimum precaution was prescribed to ascertain the bona fide on the part of consignor of input i.e. under Rule 4 and Rule 9 of Cenvat Credit Rules 2004. It is provided that credit can be taken on the basis of invoices after the inputs covered by such invoice is received. It is important that, goods covered by the invoices are received by the manufacturer in their factory.

In the facts of the present case, Appellant have received the goods on duty paying documents and recorded the receipt of the goods in their raw material account and cenvat account i.e. RG-23A-Pt. I and Pt. II and the said disputed inputs used in manufacture of dutiable goods. The Appellant also recorded the receipts and consumption of said goods in the factory. The purchases of the goods under the invoices in question were booked in books of account. The payment against the said invoices were made through cheques. On the above statutory compliance, the Appellant correctly availed the cenvat credit. Further, the department nowhere raised any dispute on the said records. Thus, the contention of the department that appellant have availed cenvat credit without receipt of goods (raw material) is not tenable.

Further, as the Appellant have discharged the Central Excise duty on the final product manufactured out of the alleged raw material, if the department is of the opinion that, the alleged goods was not received by the appellant then it is the onus on the department to prove that any other alternative raw material was used in the final products, department has failed to do so.

Tribunal in case of Lloyds Metal Engg. Co. v. CCE, Mumbai, has held that burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld. In the case of Malerkotla Steels & Alloys Pvt. Ltd. v. CCE, Ludhiana, it was held that a manufacturer cannot be denied the credit on the ground that registered dealer had not received the inputs. The allegation of the Revenue that the Appellant have not received the inputs made against the Appellant are not sustainable and thus, the impugned orders are liable to be set aside. Accordingly, the impugned orders are set aside. Appeals allowed.

Tags : Demand Cenvat credit Legality

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