No Adverse inference against availment of CENVAT Credit: CESTAT quashes Disallowance of Credit [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), quashed disallowance of credit on the ground that no adverse inference against availment of CENVAT Credit.

The Appellant, M/s New Modern Technomech Private Limited purchased furnace Oil for an amount of Rupees seven lakhs from one of the vendors namely M/s. Sri Kamala Udyog and availed CENVAT Credit of Rupees ninety-two thousand (including Cess). Show Cause Notice was issued on the ground that M/s. Sri Kamala Udyog has no existence and no plant and machinery are there in their declared premises and they are not performing any manufacturing activities.

It is alleged that said M/s.Sri Kamala Udyog had undertaken only paper transactions and issued fake Central Excise invoices. Hence the CENVAT Credit availed by the assessee against the invoice issued by the alleged fraud manufacturer cannot be treated as CENVAT in terms of Rule 3 and the invoices are not proper documents under Rule 9(1)(a) of CENVAT Credit Rules, 2004 for availment of credit. So, the credit availed on the said documents are inadmissible and recoverable along with interest and penalty.

Further, the Commissioner of Central Excise, Kolkata-IV Commissionerate issued an alert notice confirming that M/s. Sri Kamala Udyog, Rishra has no existence. The executing authority disallowed credit and ordered for recovery along with interest and also imposed penalty of equal amount under Section 11AC of the Central Excise Act, 1944 read with Rule 15 of the CENVAT Credit Rules, 2004.

On appeal, the Commissioner (Appeals) rejected the Appeal before him and upheld the adjudication order. Hence the present Appeal before the Tribunal.

A Coram consisting of P K Choudhary, Judicial Member observed that “No adverse inference has been drawn against the CENVAT Credit availed. Thus there is no failure or willful suppression of any fact of the transaction by the Appellant, having entered and recorded the transaction in its books of accounts. No adverse inference has been drawn against the CENVAT Credit availed and no cogent evidence contrary to the above submission has ever been established. In view of the above discussions, it is my considered view that the impugned orders cannot be sustained.”

To Read the full text of the Order CLICK HERE

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