2008 (12) TMI 203 - AT - Central Excise

Cenvat Credit - Duty payment documents - supplementary invoices - differential duty certificate - Rule 57E of the erstwhile Central Excise Rules, 1944 - Rule 9 of Cenvat Credit rules - These supplementary invoices were also issued under Rule 52A. We do not find any reason to hold that the supplementary invoice evidencing payment of additional duty amount should be treated on a different footing vis-a-vis the original invoices evidencing original payment of duty on the said goods inasmuch as both these documents were issued under the same provision of law. If the appellants were entitled to take Modvat credit on their inputs prior to 1-4-2000 on the strength of the original invoices issued by the supplier, they could validly claim to be entitled to take Cenvat credit of the additional amounts of duty paid on the same goods by the supplier under the supplementary invoices - credit allowed.

Summary

Issues:
- Entitlement to avail Cenvat credit on inputs using supplementary invoices and 'differential duty certificates' from 1-4-2000 to 28-8-2000.
- Validity of denial of Cenvat credits totaling to Rs. 15,47,200/- and imposition of a penalty of Rs. 3,00,000/- on procedural grounds.

Analysis:

Issue 1: Entitlement to Cenvat credit on inputs during the specified period
The appeal questioned the entitlement of the assessee to avail Cenvat credit on inputs using supplementary invoices and 'differential duty certificates' from 1-4-2000 to 28-8-2000. The department contended that as per the new rules effective from 1-4-2000, neither supplementary invoices nor differential duty certificates were specified as valid documents for Cenvat credit availment. The lower authorities upheld this view, resulting in the denial of Cenvat credits amounting to Rs. 15,47,200/- and imposition of a penalty of Rs. 3,00,000/- on the assessee for irregular availment of Cenvat credit.

Issue 2: Interpretation of rules and precedents
In the hearing, the appellant relied on the Supreme Court's decision in CCE, Madras v. Home Ashok Leyland Ltd., emphasizing that Rule 57E was procedural and did not affect the substantive right to claim Modvat credit. Additionally, reference was made to a Tribunal decision accepting TR-6 challan as a valid document for Cenvat credit. After considering submissions, the Tribunal concluded that the appellants were entitled to take Cenvat credit on inputs as done during the disputed period. The Tribunal highlighted that the supplementary invoices and differential duty certificates were issued under the same legal provision as the original invoices for duty payment. It was emphasized that the substantive conditions for Cenvat credit were fulfilled by the party, and the benefit should not be denied on procedural grounds, citing the Home Ashok Leyland Ltd. case where non-observance of procedural rules did not justify denial of substantive benefits.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellants. It was established that the appellants were entitled to avail Cenvat credit on inputs using supplementary invoices and 'differential duty certificates' during the disputed period, based on the fulfillment of substantive requirements despite procedural discrepancies. The decision was influenced by legal interpretations and precedents emphasizing the primacy of substantive compliance over procedural technicalities in matters of Cenvat credit availment.