2026-VIL-1673-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Denial of Cenvat credit on the allegation of non-receipt of goods on the strength of invoices issued by a registered dealer - Appellant availed Cenvat credit on the basis of invoices issued by a registered dealer for supply of Sponge Iron, which was alleged to be fraudulent on the ground that the dealer had supplied only invoices without actual supply of goods - Whether the disallowance of Cenvat credit on the ground of non-receipt of goods, based on such third-party statements not tested by examination-in-chief under Section 9D of the Central Excise Act, 1944, and in the absence of any investigation at the appellant's factory, is sustainable - HELD - The appellant had recorded receipt of the goods in RG-23A Part-I, made payments to the supplier through proper banking channel, disclosed the credit availed in monthly ER-1 returns, and produced certified copies of the invoices, road permits and freight vouchers. There was no case of excess or shortage of raw materials or finished goods, nor any evidence of alternative sourcing of raw material or refund of cash by the dealer - Consumption of the goods in manufacture of the final product was not disputed and duty on clearance of the final product was accepted by the department - No investigation was carried out at the factory or office premises of the appellant to ascertain the genuineness of the documents produced, and the onus lies on the department to establish that the documents relied upon by the appellant are fake, which onus has not been discharged - The dealer alleged to have supplied only invoices without goods was not made a party to the notice, nor was any penalty proposed against it, rendering the allegation of receipt of invoices without receipt of goods against the appellant alone unsustainable - Statements of the supplier, the customer's representative and the transporter, not tested by examination-in-chief as mandated under Section 9D of the Central Excise Act, 1944, have no evidentiary value and cannot form the basis for confirming the demand - In the absence of any positive and substantial evidence establishing that the appellant availed irregular credit without receipt of goods, the disallowance of Cenvat credit on inputs and input services, along with interest, cannot be sustained - The demand is set aside and the appeal is allowed
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GST & Customs updates: Sep'26
By CA Vivek Jalan

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