Can genuineness be outrightly rejected without verifying with corroborative evidence based on irregular invoices?

PJ/Case Law /2016-17/3373

Case - KLJ PLASTICIZERS LTD Versus COMMISSIONER OF C. EX. & S.T., VAPI

Citation- 2016 (45) S.T.R. 327 (Tri. - Ahmd.)
Brief Facts - The party of the case are engaged in the manufacture of plasticizers falling under Chapter 29 of CETA, 1985. They had availed Cenvat credit on various input services, mainly, on Insurance service, Banking service, etc., during the period January, 2009 to February, 2010. Alleging that the documents on which the credit availed were irregular, show cause cum-demand notice was issued for recovery of total credit of Rs. 3,34,218/-. On adjudication, the demand is confirmed and penalty of equal amount imposed. Aggrieved by the said order, they filed appeal before the learned Commissioner (Appeals), who in turn, rejected their appeal. Hence, the present appeal.
Appellant’s Contention- The appellant submits that all the particulars necessary to avail Cenvat credit are available on the respective documents/evidences enclosed with the appeal paper book. He submits that the amount of premium paid in respect of insurance charges and applicable service tax on such premiums has been mentioned in the respective copy of premium receipts. He further submits that in the bank invoice, the service tax amounts along with other particulars are reflected. Therefore, the confirmation of demand of Cenvat credit on these documents is incorrect.

Respondent’s Contention- Per contra, the learned Authorized Representative for the Revenue submits that the premium paid towards insurance was scribbled on the letter head of the insurance company and not in the form of an invoice/valid document. He submits that the doubt raised by the Department is about the payment of insurance premium and service tax applicable on such premium, and since the appellant could not produce corroborative evidence to clarify the said issues, Cenvat credit was held inadmissible.
Reasoning of Judgment – The documents/evidences enclosed with the paper book on which Cenvat credit is denied, do not inspire confidence about its genuineness, in particular, the figures entered in hand. However, it also cannot be out rightly rejected that premiums have not been paid nor suffered service tax as mentioned against these documents. All these facts need to be verified with collateral/corroborative evidences. Therefore, in the circumstances, it is prudent to remand the matter to the adjudicating authority to ascertain the correctness of these documents and entries made therein with other corroborative evidences that would be produced by the appellant during the course of proceedings, while determining the eligibility of Cenvat credit on such input services. All issues are kept open. Needless to mention that a reasonable opportunity of hearing be extended to the appellant before passing the order. Appeal is allowed by way of remand to the adjudicating authority.

Appeal allowed.
Comment – The gist of the case is that the source/ documents/evidence required for the availing credit were irregular thus show cause cum-demand notice was issued for recovery of total credit. On adjudication, the demand is confirmed and penalty of equal amount was imposed. Thus it was to be prudent to remand the matter to the adjudicating authority to ascertain the correctness of these documents and entries made therein with other corroborative evidences that would be produced by the appellant during the course of proceedings, while determining the eligibility of Cenvat credit on such input services.
Prepared by- Alakh Bhandari

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PJ/Case Law /2016-17/3373

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