Demand for excess CENVAT Credit can't be based on Third Party's Statement: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that demand for excess CENVAT credit can't be based on third party's statement.

Shri S P Siddhanta appeared for the Appellant and Shri A Roy, Authorized Representative appeared for the Respondent.

M/s. AIC Iron Industries Private Limited, the Appellant company is engaged in manufacturing MS Ingot falling under Chapter Heading 7206 of the Central Excise Tariff Act, 1985. They are holding Central Excise Registration and are availing CENVAT Credit in respect of inputs used in the manufacture of final products.

A Show Cause cum Demand Notice dated 07.11.2014 was issued to the Appellant and its Director alleging wrong availment of CENVAT Credit on MS Round Cutting during the period from December 2012 to January 2013 amounting to Rs.7,64,588/-.

It was alleged that the aforesaid goods were claimed to be received from the supplier M/s. Shree Ganesh Forging Company but not received and the amount of such credit availed and utilized by them is irregular and the same is recoverable from them.

Further CENVAT Credit availed on transportation of the disputed inputs amounting to Rs.2,037/- was also proposed to be disallowed and recovered. It was further alleged that Sri Vivek Adukia, Managing Director of the Appellant Company was well aware of the facts and he willingly and knowingly participated and monitored the said irregular availment of CENVAT Credit and accordingly it was proposed to impose a penalty upon the Managing Director in terms of Rule 26 of the Central Excise Rules, 2002. On Appeal, the Commissioner (Appeals) upheld the Order-inOriginal.

A Coram of Shri P K Choudhary, Member(Judicial) that there is no other evidence on record of cash flow-back or any inculpatory statement to substantiate that CENVAT Credit was taken irregularly based on paper transaction i.e. without receipt of raw materials against invoices.

It was further observed that the statements of the transporters are not corroborated with any evidence. Demand only based on third party’s statement. There is no evidence which can show that the records maintained by the Appellant are not correct. Only based on statements of some of the transporters, the credit is sought to be disallowed whereas the statements are in isolation from any corroboration. The Tribunal held that the impugned order for disallowance of credit to the Appellant is not sustainable and the demands and penalty are set aside. The Appeals was allowed. 

To Read the full text of the Order CLICK HERE

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