2015 (1) TMI 587 - AT - Central Excise

Waiver of pre deposit - Cenvat credit - applicant availed irregular credit on the basis of supplementary invoices - contravention of Rule 9(1)(b) of the Cenvat Credit Rules, 2002 - Held that - Rule 9(1)(b) would apply in the case of supplementary invoices issued by the importer. There is an exception in Rule that it would not apply in the case of and additional amount of duty become recoverable from the importer for non-levy or short-levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provisions of Excise Act, or of the Customs Act, 1962 or the rules made thereunder with intent to evade payment of duty. In the present case, we find that proceeding was initiated against the supplier for recovering of the amount on account of short-levy by reason of fraud, collusion etc. - Partial stay granted.

Summary

Issues involved:
- Availing irregular credit on the basis of supplementary invoices in contravention of Rule 9(1)(b) of the Cenvat Credit Rules, 2002.
- Interpretation of Rule 9(1)(b) in the context of non-reversal of Special Additional Duty (SAD) by the supplier.
- Applicability of the exception clause in Rule 9(1)(b) regarding recovery of duty from the importer for non-levy or short-levy due to fraud, collusion, or misstatement.
- Whether the recovery mechanism introduced in Rule 3(5) affected the demand confirmed against the supplier.
- Clubbing the present appeal with the appeal of the suppliers.

Analysis:
1. The case involved the denial of Cenvat credit to the applicant for availing irregular credit based on supplementary invoices issued by the supplier, leading to a demand of duty, interest, and penalty. The dispute centered around the interpretation of Rule 9(1)(b) of the Cenvat Credit Rules, 2002, concerning the issuance of supplementary invoices by the importer.

2. The applicant's argument was that the exception clause in Rule 9(1)(b) should not apply as there was no short payment of Customs duties at the time of import by the importer due to fraud. They contended that the recovery mechanism against the supplier was introduced later and should not impact the current demand. The applicant sought to club their appeal with that of the suppliers.

3. On the contrary, the Revenue's representative argued that the non-reversal of SAD by the importer while transferring goods to the applicant fell within the ambit of Rule 9(1)(b)'s exception clause. They maintained that the exception applied not only to duty at the time of import but also to goods removed from the importer's premises.

4. The Tribunal, after considering both parties' submissions and the records, held that Rule 9(1)(b) applied to supplementary invoices issued by the importer. They found that the proceedings against the supplier for recovery due to short-levy by fraud or collusion contradicted the applicant's claim. Consequently, the Tribunal directed the applicant to make a pre-deposit, linked the appeal with the supplier's appeal, and stayed recovery pending further proceedings.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, arguments presented by both sides, and the Tribunal's decision based on the interpretation of relevant legal provisions.