Whether credit can be denied in absence of proper investigation?

PJ/CASE LAW/2015-16/2854

Case:-MAHINDRA ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA

Citation:- 2015 (320) E.L.T. 131 (Tri. - Del.)

Brief Facts:-The appellant is in appeal against the impugned order wherein Cenvat credit on inputs have been denied on the premises that appellant has taken Cenvat credit on the basis of invoices without receiving the goods in their factory. Facts of the case are that the investigation was conducted against the supplier of the goods Shri Sachin Aggarwanshi for the goods supplied by him to these parties and as the supplier was not available and did not produce any document before the authorities, therefore, show cause notice was issued to the appellant to deny Cenvat credit on the invoices issued by Shri Sachin Aggarwanshi on the premise that as appellant has not received physically the goods but received only the invoices. Both the lower authorities confirmed the demand against the appellant along with interest and penalties were also imposed. Aggrieved from the said order appellant is before the tribunal.

Appellants Contention:- Ld. Counsel for the appellant submits that no statement of the supplier of the goods have been recorded in appellant’s case nor any corroborative have been produced by the Revenue to deny Cenvat credit. No investigation was conducted in the factory of the appellant itself to find out whether goods have been received by the appellant or not. No statement of any transporter etc. has been recorded. In these circumstances, Cenvat credit cannot be denied without any investigation as held by Hon’ble Punjab and Haryana High Court in the case of M/s. Talson Mills Store, Jalandhar v. C.C.E., Ludhiana, Central Excise Appeal No. 49/2013 vide order dated 27-8-2013 [2015 (315)E.L.T.415 (P & H)]. Therefore, impugned order is to be set aside.

Respondents Contention:-On the other hand ld. AR submits that in this case supplier was not traceable and he did not produce any record before the lower authorities. He made the statement that he issued the invoices but not supplied the goods. Therefore, the conclusion of the lower authorities has been correctly drawn that appellant has not received the goods and taken the Cenvat credit on the strength of invoices only.

Reasoning of Judgement:-Heard the parties. Considered the submissions. On perusal of the records tribunal find that no statement of the supplier with regard to the appellant have been recorded to say that supplier has not supplied goods to the appellant but supplied only invoices. Further no other investigation has been conducted with regard to the appellant by physical taking the stock etc., recording the statement of the supplier or the appellant themselves. In these circumstances, relying on the decision of the Hon’ble High Court of Punjab and Haryana in the case of Talson Mills Store tribunal hold that demand is not sustainable as the High Court has found that revenue is required to hold an independent enquiry against the appellant and only thereafter could an order be passed. As no enquiry has been conducted against the appellant, therefore impugned order deserves no merits and hence it is set aside. Appeal is allowed with consequential relief if any.

Decision:-Appeal allowed.

Comment:- The gist of the case is that in the given case as no evidence is traced regarding the invoices issued without supply of goods and nor any physical examination of stock is undertaken in factory to ascertain non receipt of goods; therefore, the Cenvat credit cannot be denied in absence of proper investigation. This was based on the landmark decision in the case of Talson Mills Store, Jalandhar v. C.C.E., Ludhiana.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2854

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