Whether discrepancies in invoice lead to denial of credit?

PJ/CASE LAW/2015-16/2738

Case:-TUBEWELL WORKSHOP & GENERAL INDUSTRIES VERSUS OMMR. Of C. EX., DELHI- IV

Citation:- 2015(318) E.L.T. 174 (Tri.- Del.)

Brief facts:- The appellant is in appeal against the impugned order wherein CENVAT credit amounting to Rs. 19,63,779/- has been denied to the appellant along with the interest and a penalty of the equivalent amount has been imposed on them under Rule 15 of CENVAT Credit Rules, 2004.
The brief facts of the case are that the appellant is manufacturer of parts of excavator, loader machines and press machines. An audit was conducted in the factory of the appellant on 8-7-2008 for the period 2005-06 and 2006-07. It was found that the appellant has procured goods from registered dealers during the impugned period under the cover of challans issued by the registered dealer and later on invoices were issued thereof. The invoices were compared with the challans and it was found that in four cases quantity corresponding to invoices and challan does not match. In 16 cases it was found that date of Challan and invoices differs and in six cases vehicle numbers also differs. Therefore, a show cause notice was issued by invoking extended period of limitation to deny the CENVAT Credit on the above discrepancies. The matter was adjudicated and demand proposed on the show cause notice were confirmed and also the adjudication order was confirmed. Thereafter, appellant filed the appeal before this Tribunal.

Appellant’s contention:-The ld. Counsel for the appellant submits that the discrepancies pointed out during the course of the audit has been explained by the appellant explaining that in the case of difference of dates it is submitted that the goods were cleared under the Challan and thereafter invoice is being issued. Therefore, invoice may be issued on the same day or the very next day. For the difference in quantity he submits that on the same day two invoices have been issued but quantity of one invoice has been taken. If the quantity of both the invoices is taken then there is no difference in quantity. For vehicle number he explained that if the goods have been cleared on challan in the late evening the goods have to go for weightment and if there is a long queue then goods have to be shifted to another vehicle as the supplier of the vehicle needs vehicle under which goods have been cleared from the godown of the registered dealer. In those cases there is a difference in vehicle number. But there is no allegation against the appellant that they have not received the goods in their factory. It is further submitted that no investigation was conducted at the end of the supplier of the goods and the transporters who supplied the goods. He further submitted that as per the trade practice in their area, the goods are required to be cleared on the basis of challan which is authenticated document as per the Haryana Sales Tax authorities and after receipt of the good proper invoice is to be issued. It is not in dispute that against these goods appellant has not paid the amount and these goods have been used by the appellant in the manufacturing of the final product. Therefore, credit cannot be denied. He also submits that to deny the CENVAT Credit the adjudicating authority has relied on the decision of this Tribunal in the case of Baldva Textiles Pvt. Ltd. v. C.C.E., Jaipur - 2010 (253)E.L.T.90 (Tri.-Delhi).He submits that facts of this case are different from the facts of the case which has been relied on. Therefore, CENVAT credit cannot be denied. In these circumstances, he prayed that impugned order be set aside.

Respondent’s contention:- Ld. Commissioner AR opposes the contention of the ld. Counsel and submits that it is a fact on record that there was a discrepancy of weight, dates and vehicle numbers. She further submits that as per Rule 11 of the Central Excise Rules, 2002 the goods are to be cleared against the invoice and in this case admittedly goods have not been received by the appellant against the challan. Therefore, CENVAT credit has been rightly denied. She further drew my attention for invoking the extended period of limitation and submits that in the show cause notice there is a clear allegation against the appellant that with an intention to evade payment of duty to take inadmissible credit, they have not disclosed fact of availment of credit to the department. She further submits that the supplier of the goods or the transporter was not required to be made co-noticee in this case. Therefore, impugned order is required to be upheld.

Reasoning of judgement:-In this case CENVAT credit sought to be denied on the basis of discrepancies that is found during the course of the audit between challan and invoices. There are three types of discrepancies: a) Quantity, b) Difference in dates of invoice and Challan, c) Vehicle Number does not match. The appellant has explained all the discrepancies in detail and tried to justify the clarifications regarding quantity it is explained that on the same date two invoices has been issued and quantity of one invoice has been taken into consideration, if quantity of both the invoices is taken into consideration then there will be no difference in quantity. He further explained that regarding the difference in dates, it is explained that goods have been cleared on previous date on the strength of challan and next day invoice has been issued. This fact has not been considered by lower authorities. Further, difference in vehicle number has also been explained that in some case vehicle is required by the supplier of vehicle immediately for their own use of some other purpose. In that case vehicle has been changed. Goods have been loaded to some other vehicle. Therefore, there is a difference in vehicle number. It is a fact that goods have been received by the appellant in their factory as goods have been manufactured from the inputs of same has been cleared on payment of duty. Moreover, no statement of the supplier of goods and the transporter has been recorded to corroborate the allegations against the appellant. Further, they find that appellant has produced a certificate from the supplier of goods that they have supplied the goods and received the payment through account payee cheque. These facts have not been controverted by the Revenue at any stage. Revenue has relied on the case of Baldva Textiles Pvt. Ltd. (supra). They find that in that case goods have been delivered frequently from the manufacturer to the user of goods on the strength of slips and invoices have been issued by the registered dealer and not by the manufacturer of the goods. But in this case manufacturer of the goods is Steel Authority of India Ltd. who cleared the goods to the registered dealers against the Cenvatable document and on the basis of that duty paying document, the registered dealer has sold the goods to the appellant. These facts are also not in dispute. In these circumstances, the facts of this case are distinguishable from the case of Baldva Textiles Pvt. Ltd (supra). Further, they find that in this case as the goods have been received by the appellant and duty has been paid there on. Therefore, appellant are entitled to take CENVAT credit.
In these circumstances, they set aside the impugned order and allow the appeal with consequential relief, if any.

Decision:- Appeal allowed.

Comment:-The substance of the case is that when the discrepancies noticed in invoices has been explained satisfactorily by the assessee, the credit cannot be denied. The discrepancies noticed in quantity, date and vehicle number were reasonably explained by the assessee and there was no doubt that the goods have been received and used in the manufacture of final products. Therefore, the cenvat credit was allowed.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2738

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