2026-VIL-1465-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Denial of Cenvat Credit on ground of supplier fraud - Appellant manufacturer of non-alloy steel ingots availed Cenvat Credit on input scrap purchased from vendor under 34 invoices and accounted for in RG 23A Part I records, bank statements and ledger accounts - Revenue initiated action alleging that vendor had fraudulently issued paper invoices without supplying material and had defrauded revenue by over three crores. Revenue denied Cenvat Credit on ground that goods were not received - Whether Cenvat Credit can be denied to recipient-manufacturer merely on ground that supplier has issued fake invoices - HELD - Denial of Cenvat Credit to manufacturing unit on ground that supplier has fraudulently issued invoices is neither proper nor justified where recipient has produced documentary evidence of proper invoicing under Rule 9, proper accounting in RG 23A Part I, vendor ledger accounts and bank statements showing payment to vendor - The fact that supplier fraudulently dealt with the revenue cannot stand in way of granting Cenvat Credit to recipient manufacturer who shows all details of accounting in books of account and invoice details. The supplier should have been made co-noticee in proceedings if reliance was placed on documents recovered from supplier. Physical receipt of goods is sufficiently proved through proper invoices, accounting records, ledger accounts and bank statements - Extended period cannot be invoked when all transactions have been properly accounted for in RG 23A Part I and ER 1 Returns filed by appellant - Confirmed demand of Rs.10,38,428/- on account of Cenvat Credit taken is set aside both on merits and on ground of time bar. Demand on account of shortage of finished goods which was not contested remains confirmed. Penalty imposed on Director which was not contested remains recoverable – The appeal is partly allowed
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