Saiyam Silk Mills Pvt Ltd Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
In Saiyam Silk Mills Pvt. Ltd. Vs. Commissioner of CGST & Central Excise, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, upheld the denial of Cenvat Credit amounting to Rs.15,64,330 availed by the appellant on invoices issued by suppliers subsequently found to be fake, bogus, and non-existent.
The appellant, engaged in processing man-made fabrics, had availed Cenvat Credit during December 2003, January 2004, May 2004, and June 2004 on invoices purportedly issued by six suppliers of grey fabrics. Following investigation, the department concluded that these suppliers were fictitious entities. A show cause notice dated 12.12.2008 proposed recovery of the credit along with interest and penalties. The Commissioner confirmed the demand, invoked the extended period of limitation, and imposed equal penalty on the company and its Director. While the Commissioner (Appeals) upheld the demand, interest, and penalty against the company, the penalty imposed on the Director was set aside.
Before the Tribunal, the appellant contended that the demand was time-barred since the ingredients necessary for invoking the extended period under Section 11A were absent. It argued that suppliers found non-existent during investigation in 2008 could not automatically render invoices issued in 2003-2004 fraudulent. The appellant further maintained that it had received grey fabrics through merchant exporters, possessed duty-paid documents, and had made payments through legitimate channels. It also alleged violation of principles of natural justice due to non-supply of relied-upon documents.
