Local Commissioner's Report Establishing Supplier's Existence Is Sufficient: CESTAT Grants CENVAT Credit To Assessee

The Bench of M.M. Parthiban (Technical Member) has observed that “the affidavit duly bearing the stamp of the Civil Judge (Sr. Division), and submitted by an independent local Commissioner appointed by the Civil Court Judge, Ludhiana, is independent evidence to prove that the supplier, had the manufacturing facilities for production of copper ingots, from whom the assessees have obtained the copper ingots on payment of central excise duty under the cover of Central Excise Invoice”.

Rule 26 of the Central Excise Rules, 2002 provides that if any producer, manufacturer, registered warehouse person, importer issuing an invoice for CENVAT credit, or registered dealer removes excisable goods in violation of the rules, fails to account for excisable goods produced, manufactured, or stored, engages in such activities without the required registration, or violates any rule or notification with intent to evade duty, then the goods in question are liable for confiscation.

In this case, the Directorate General of Central Excise Intelligence (DGCEI), Mumbai, alleged that the assessee has claimed inadmissible CENVAT credit of ₹14,67,774 based on invoices for copper bars and ingots from M/s Annapurna Impex Pvt. Ltd. (AIPL), Ludhiana, without actually receiving the goods. A show cause notice was issued by DGCEI which was adjudicated by the Additional Commissioner, Central Excise confirming the demand of ₹14,67,774 with interest and imposed penalties under Rule 26 of the Central Excise Rules, 2002.

Aggrieved by the decision of Additional Commissioner the assessee filed an appeal to the Commissioner of GST & Central Excise, Appeals, Mumbai which was rejected. The assessee has challenged the order passed by the Commissioner of GST & Central Excise, Appeals, Mumbai before the Tribunal.

The Tribunal noted that M/s Annapurna Impex Pvt. Ltd. (AIPL), Ludhiana, disputed the DGCEI's allegation that they lacked facilities to manufacture copper ingots. They filed a civil suit against the local Commissioner of Central Excise and Customs. In response, the Civil Judge (Senior Division) Ludhiana appointed a Local Commissioner, to inspect the factory premises and report on the machinery. The Local Commissioners visited the factory to prepare a presence sheet and report on the findings.

“The affidavit duly bearing the stamp of the Civil Judge (Sr. Division), and submitted by an independent local Commissioner appointed by the Civil Court Judge, Ludhiana, is independent evidence to prove that M/s AIPL, had the manufacturing facilities for production of copper ingots, from whom the assessees have obtained the copper ingots on payment of central excise duty under the cover of Central Excise Invoice. Therefore, the conclusion arrived in the impugned order that the CENVAT credit taken on the basis of invoice issued by M/s AIPL, Ludhiana is without receipt of material is contrary to the factual position,” added the bench.

The Tribunal observed that during cross-examination, the manager of the assessee company clearly confirmed that he received both the invoice and the material from M/s AIPL. Therefore, there is no evidence to support the claim that the receipt of copper ingots by the assessee from M/s AIPL was improper.

The bench noted that the assessee has produced documents that M/s. Annapurna was in existence during the material period as established by their invoices and the Central Excise monthly returns. So, the assessee has discharged their responsibility and therefore, Cenvat credit availed on the basis of invoices of M/s. Annapurna cannot be denied.

In view of the above, the Tribunal allowed the appeal.

Counsel for Appellant/ Assessee: Tejas Thakkar

Counsel for Respondent/ Department: Vinod S. Chettiparambil

Case Title: Star Metal & Tubes Corporation v. Commissioner of Central Goods and Service Tax Mumbai East

Case Number: Excise Appeal No. 85149 of 2021