2016 (11) TMI 45 - AT - Central Excise

CENVAT credit - revision of price of free of cost materials - supplementary invoice - manufacture of auto parts - job work - whether the appellant is eligible to avail cenvat credit on the inputs received from GMI based on supplementary invoice issued by GMI on 29.06.2006 for the materials cleared from April, 2004 to May, 2006? - Held that - during the material time the Cenvat Credit Rules do not prescribe any time limit for availing the credit. On the main issue regarding applicability of Rule 9(1)(b) of the said Rules, there has been no proceedings against GMI who issued the said supplementary invoice. There has been no allegation to cover the present supplementary invoice under exclusion of Rule 9(1)(b) for barring the credit. Admittedly, GMI paid additional Central Excise duty on recalculation of the price of various items supplied free of cost to the appellant on a much later date. On their own acceptance they have paid the differential duty and issued supplementary invoice to the appellant who availed the credit. Reliance placed on the decision of Indian Oil Corp. Limited vs. CCE, Kolkata-VI 2012 (2) TMI 421 - CESTAT KOLKATA where it was held that in the absence of any finding that extra duty payment by the supplier of input has been made on account of the finding regarding fraud, suppression etc. the credit of supplementary invoice cannot be denied - In the present case there has been no proceedings against GMI with reference to the additional duty payment made by them. As such, the denial of credit as per the impugned order is not justifiable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of appellant to avail cenvat credit on inputs received based on supplementary invoice.
2. Applicability of Rule 9(1)(b) of the Cenvat Credit Rules, 2004.
3. Allegations of fraud, collusion, or non-levy of duty by the manufacturer.
4. Precedents regarding denial of credit based on supplier's duty payment.

Issue 1: Eligibility of appellant to avail cenvat credit on inputs received based on supplementary invoice:
The appellant, engaged in manufacturing auto parts on a job work basis, received free raw materials from General Motors India Pvt. Limited (GMI). The dispute arose when the appellant claimed credit based on a supplementary invoice issued by GMI due to a revision in the price of the free materials. The Revenue objected to this credit citing Rule 9(1)(b) of the Cenvat Credit Rules, 2004, which allows credit unless the duty becomes recoverable from the manufacturer due to non-levy or short levy because of fraud or collusion. The Tribunal found that there were no proceedings against GMI regarding the supplementary invoice, and GMI had paid additional duty without any allegations of fraud. Therefore, the denial of credit was deemed unjustifiable, and the appeal was allowed.

Issue 2: Applicability of Rule 9(1)(b) of the Cenvat Credit Rules, 2004:
The main contention revolved around whether the appellant could avail cenvat credit on inputs based on the supplementary invoice issued by GMI. The Tribunal noted that during the relevant period, there was no time limit prescribed for availing credit under the Cenvat Credit Rules. Additionally, since there were no proceedings against GMI and no allegations of fraud or collusion, Rule 9(1)(b) did not apply to bar the credit. GMI had paid the additional duty voluntarily and issued the supplementary invoice, allowing the appellant to avail the credit.

Issue 3: Allegations of fraud, collusion, or non-levy of duty by the manufacturer:
The Revenue objected to the appellant's claim for credit based on the supplementary invoice, arguing that Rule 9(1)(b) of the Cenvat Credit Rules, 2004, restricted credit in cases where duty becomes recoverable from the manufacturer due to fraud or collusion. However, as there were no such allegations against GMI and GMI had paid the additional duty voluntarily, the Tribunal found the denial of credit unjustifiable.

Issue 4: Precedents regarding denial of credit based on supplier's duty payment:
The appellant cited previous Tribunal decisions where it was held that denial of credit based on a supplier's duty payment is only justified if there are findings of fraud or suppression. The Tribunal noted that in the present case, there were no proceedings against GMI regarding the additional duty payment, and as such, the denial of credit was not justifiable. Therefore, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the key issues involved and provides a comprehensive understanding of the Tribunal's decision in the case.