By TIOL News Service

NEW DELHI, MAR 12, 2013: PROCEEDINGS were initiated against the respondent assessee alleging that as they have received the goods from a supplier who was not in existence, the availment of credit by the respondent was not in accordance with the law. The said show cause notice culminated into an order passed by the original adjudicating authority who confirmed the demand.

The said order was challenged by the respondent before Commissioner (Appeals). It was contended by the assessee that they have availed credit on the basis of cenvatable invoices issued by the supplier. The same were duly supported with form 31 and the said trade tax form 31 has been duly checked by the Trading Tax authority of West Bengal, Bihar, UP borders before the final delivery to the respondents. The same physically entered their factory and were duly recorded in the statutory records. The said ingots were further used in their manufacture of their final product which have been cleared after making payment of duty of after making entry in the statutory records. The payment of ingots was made by an account payee cheque . They also referred to Board's circular No.766/82/2003-CX dated 15.12.2003 clarifying that user manufacturer is not liable to reverse the credit if manufacturer supplier has not paid the duty, if the recipient of the raw material has made the payment in respect of goods supplied including excise duty, action should be taken against the supplier. Reliance was also placed upon various decisions of the Tribunal, in support of above pleas.

Accepting the above submissions, the Commissioner (Appeals) dropped the demand.

Revenue is in appeal against the above order of the Commissioner (Appeals).

On hearing both sides, the Tribunal held:

The appellant authority has passed detailed order and has rightly followed the various decisions of the Tribunal laying down that credit cannot be denied on the ground that manufacture of the goods has not paid the duty where the inputs stand received on the basis of valid documents and after taking all the reasonable precautions. In case invoices contained all the particulars and credit has been availed on bona fide belief, the denial of credit on the ground that dealer has not received the goods in accordance with the law, is neither just nor fair.

(See 2013-TIOL-426-CESTAT-DEL)