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2026 Supreme(Online)(CESTAT) 3101
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Rachna Gupta, Judicial Member
Kandoi Metals Powders Mfg. Co. Pvt. Ltd. – Appellant
Versus
Commissioner, Central Goods and Service Tax & Central Excise, Jaipur-1 – Respondent
Excise Appeal No. 55137 of 2023
For the Appellants/Petitioners: Priyanka Goel
For the Respondents: Anuj Kumar Neeraj
Cenvat credit cannot be denied based on third-party fraud allegations if the buyer provides documentary evidence (invoices and Goods Receipts) of actual receipt of goods, as documentary evidence prevails over uncorroborated oral statements.
Headnote:(A) Cenvat Credit - Eligibility - Documentary Evidence - Denial of credit based on alleged fraud of a third-party supplier is unsustainable when the buyer produces valid invoices and Goods Receipts (GR) proving physical receipt of goods. (Para 7)
(B) Evidence - Oral vs Documentary - In the absence of corroborative documentary evidence, oral statements recorded during investigation cannot prevail over documentary evidence, and compliance with Section 9D of the Central Excise Act is mandatory for admissibility of oral evidence. (Para 7.1)
(C) Burden of Proof - Departmental Allegations - The burden to prove fraudulent availment of credit lies with the Department; bald allegations without cogent proof or investigation of the assessee's premises are insufficient to disallow credit. (Para 7.2)
Issues: Whether Cenvat credit can be denied to a buyer based on the alleged non-existence of manufacturing facilities at the supplier's end despite the buyer possessing documentary evidence of receipt of goods.
Dr. Rachna Gupta
Present appeal is filed to assail the Order-in-Appeal No.19/2023 dated 15.03.2023.
2. The facts in brief, which culminated into the said order are asfollows: M/s Kandoi Metals Powders Mfg. Co. Pvt. Ltd.1the appellant herein is engaged inmanufacturing of Copper Powder, Copper Wire Rope and Copper Wire etc. Department got an intelligence about M/s Metal Alloy Industries 2MAI who were also registered with Central Excise department for manufacturing of Copper Rod, Re-melted Copper Ingots etc. However were informed to be fraudulently availing/passing of Cenvat credit without having any facility to manufacture, the said finished goods in the factory premises. During investigation it got revealed that only once Lead Ingots were manufactured in the factory of M/s MAI, during the month of February 2016 and no other goods at any other point of time were manufactured by them. The said MAI was also found to have availed Cenvat credit on paper invoices without actually receiving the goods which they were passing to various othermanufacturers/dealers without actual delivery of the goods.
2.1 The statements of the employees (Guard, Accountant, Supervisor etc. the owner of the trucks and the proprietor) of MAI as well as the proprietor thereof also revealed that only once the factory got facility of manufacturing in February 2016 also. The production of products, as given in the show cause notice was also denied with the mention that RG 23A Part-I was not being maintained by MAI. The dealers of MAI viz. M/s Metal Impex, M/s Bhiwadi Cylinders Pvt. Ltd., M/s Metal Alloys and even the present appellant - M/s Kandoi Metals Powders Mfg. Co. Pvt. Ltd. were also found to have no facility of manufacture and supply of the goods intheir registered premises.
2.2 The department alleged that MAI was purchasing Cenvatable invoices without receiving the raw material physically in their factory premises and was passing on Cenvat credit on the purportedly raw material/inputs to various manufacturers/dealers including the appellant. The appellant was alleged to be involved in fraudulent availment of Cenvat credit. Hence vide show cause Notice No. 681/20/1003 dated 03.09.2020 Cenvat credit amounting to Rs. 5,25,245/- as availed by the appellant was proposed to be disallowed to the appellant alleging that the same has been wrongly availed. Interest on the said amount at appropriate rate in terms of Section 11AA of Central Excise Act along with the penalty of the equal amount in terms of Section 11AC (1)(c) of CEA was also proposed to be imposed upon the appellants. The said proposal was initially confirmed vide the Order-in-Original No. 03/2021-22 dated 25.10.2021. Appeal against the said order has been rejected vide the impugned order under challenge. Beingaggrieved, the appellant is before this Tribunal.
3. I have heard Ms. Priyanka Goel, learned counsel for the appellant and Shri Anuj Kumar Neeraj, learned AuthorizedRepresentative for Revenue.
4. Learned counsel for the appellant has submitted that there was sufficient evidence produced by the appellant to establish that the quantity of inputs supplied i.e. 9772.00 kg. of Copper Ingots by M/s Bhiwadi Cylinders Pvt. Ltd under the cover of invoices had been duly received into the appellant’s factory and were used in the manufacture of final products. Hence the credit of Rs. 5,25,245/- as availed on the basis of those invoices has wrongly been denied to the appellant. The allegations of the department are only presumptive in nature which stands falsified by the documentary evidence as that of invoices. The copies of Goods Receipt3GR issued by M/s MAA Shakumbari Logistics Pvt. Ltd. where the appellant is shown as the consignor and M/s Bhiwadi Cyclinders Pvt. Ltd. is shown as consignee were also submitted before the authorities below. But those have not been considered. Also the receipt of those goods have been duly accounted for in RG 23A Part-II register copies whereof are mentioned to have
