Case Law Details
Commissioner, Central Excise & CGST Vs Prem Jain Ispat Udyog Pvt. Ltd. (CESTAT Delhi)
Under rule 4(1) of the Credit Rules, CENVAT credit of inputs to be used in the manufacture of final product is allowable to the manufacturer only on receipt of the goods along with invoices in the factory of manufacturer. Rule 4(5) of the Credit Rules also casts a burden of proof regarding the admissibility of the CENVAT credit upon the manufacturer taking such credit. The respondent failed to comply with the above provisions of the Credit Rules. It was, therefore, not entitled to take CENVAT credit amounting to Rs. of Rs. 86,38,805/-on the strength of invoices which were not genuine.
The Commissioner (Appeals), as can be seen from the order, even after accepting that the invoices had been issued fraudulently still proceeded to grant relief to the respondent by holding that they were not bogus or fake and, therefore, CENVAT credit taken on the basis of such invoices are admissible. This finding is contrary to the factual position emerging from the records. M/s Aditya Enterprises was not in existence; M/s Shree Ram Engineering & Casting was not a manufacturing unit and in fact was engaged in construction of residential apartments; and M/s Ganesh Udyog and M/s L.S. Construction were not found on the mentioned address. It is clearly established that neither these firms were engaged in the manufacture of goods nor they had sold or cleared the goods but had generated invoices only for the purpose of passing CENVAT credit. It is also difficult to accept the finding of the Commissioner (Appeals) that the respondent was not a party to the fake transactions. It is only the respondent who was to gain by adoption of such a mode and, therefore, the conclusion that even though only invoices were received by the respondent without the goods, the respondent had no role to play is perverse. The respondent may have received the raw materials for manufacturing purposes, but there is nothing to link the said purchase of the raw material with the invoices against which CENVAT credit was taken by the respondent. It was imperative for the respondent to establish the purchase of such raw materials with the invoices issued by the aforesaid firms.
The order dated 16.10.2018 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside.
FULL TEXT OF THE CESTAT DELHI ORDER
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