The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh bench has recently held that the benefit of cenvat credit cannot be denied to the taxpayer on the basis of a faulty investigation conducted by the department.
The appellant, a Company, sold the goods to one Sikkim Ferro Alloy, who was buyer of the goods, the consignee were M/s. Adarsh Enterprises and M/s Gandhi Springs. As the goods were not up to the mark and the same were returned to the appellant. The appellant availed credit on returned goods which have been refurbished again and sold on payment of duty. During the investigation, it was found that letters on which the appellant taken credit are fake letters. An order was passed against the appellants after the investigation denying credit in respect of the purchase of the subject goods.
The Tribunal found that the consignees have not returned the goods but produced the ledger account.
Judicial Member Mr. Ashok Jindal observed that “the ledger accounts are with the department, the department could have verifiedtheir statement is correct or not? By producing the ledger account. The said documents have been hidden by the department and not brought on record, therefore, the allegation without evidence is not acceptable in the law.”
“Further, the appellant sold the goods to M/s Sikkim Ferro Alloy but neither any investigation nor statement ever recorded during investigation of M/s Sikkim Ferro Alloy. In the circumstance, investigation conducted by the department is faulty, therefore, I hold that on the basis of faulty investigation, credit of Rs.6,75,872/- cannot be denied to the appellant. Therefore, I set aside the impugned order and allow the appeal with consequential relief, if any,” the Tribunal said.
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