By TIOL News Service

NEW DELHI, JAN 17, 2017: THE appellant is manufacturer of PVC Cables. For this purpose, they are receiving PVC compound. They have availed Cenvat credit on receipt of PVC compound from various suppliers. The present dispute is with respect to PVC compound received from M/s. Natraj Plast Industries Limited during the period 2005-06. In the investigation undertaken by the Revenue against M/s. Natraj Plast Industries Limited, it was established that in addition to the PVC compound manufactured and supplied by them to various persons, they also procure the same PVC compound from the open market and supply the same under their invoices as if manufactured by them. In the present dispute, the Revenue's case is 10 such invoices issued by M/s. Natraj Plast Industries Limited on the basis of which PVC compound was received by the appellant were not goods manufactured and supplied by M/s. Natraj Plast Industries Limited. In the proceedings before the Original Authority as well as Commissioner (Appeals), demand for reversal of Cenvat credit to the extent of Rs. 1,94,690/- stands confirmed along with payment of interest and penalty. The said amount was already paid by the appellant. However, the demands are challenged in the present appeal.

Tribunal observed,

"The dispute is with respect to Cenvat credit amounting to Rs. 1,94,690/- availed by the appellant on the basis of invoices issued by M/s. Natraj Plast Industries Limited. Even though M/s. Natraj Plast Industries Limited are manufacturer of PVC compound but the investigation undertaken by Revenue has established that, in respect of these 10 invoices issued by M/s. Natraj Plast Industries Limited and based on which Cenvat credit have been availed, have not been manufactured by them. It is further established that these goods stand procured from the open market and supplied as the same have been manufactured by M/s. Natraj Plast Industries Limited. The Director of the appellant also has admitted in the statement before the Revenue authorities that the Director of M/s. Natraj Plast Industries Limited had told him that the material being supplied was procured by them from some other sources. Once it has been established that the goods covered by these 10 invoices were not actually manufactured by M/s. Natraj Plast Industries Limited but were procured from outside, Cenvat credits availed on the basis of those 10 invoices will not be proper. The Commissioner (Appeals) in his order has upheld the recovery of Cenvat credit with interest and penalty. No reason to interfere with such order and the same is upheld."

The appeal is dismissed.

(See 2017-TIOL-142-CESTAT-DEL)