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2017 (12) TMI 93 - AT - Service TaxCENVAT credit - duty paying invoices - supplementary invoices - Rule 9(1) BB of the Cenvat Credit Rules, 2004 - whether on the strength of supplementary invoices issued by the service provider of service tax paid under Section 73(4A) of Finance Act, 1994, the appellant is entitled to avail Cenvat credit or not? - Held that - proviso to Section 73(4A) is all in nature of settlement of dispute and as per the said provision if the amount of service tax along with interest and 1% penalty during the period of default has been paid, in that circumstance proceedings are to come to an end. In that circumstance, the allegation of fraud, collusion, wilful suppression of facts or non payment of service tax with intent to evade payment of service tax under the Act or Rule, cannot be held that these ingredients are there - In the absence of these ingredients, in terms of Rule 9 (1) BB of Cenvat Credit Rules, Cenvat credit cannot be denied to the appellant. Reliance placed in the case of Indian Oil Corporation Ltd. Versus CCE Mumbai II 2011 (6) TMI 520 - CESTAT, MUMBAI . On the basis of supplementary invoices Cenvat credit cannot be denied on the ground of fraud, collusion, wilful misstatement or suppression of facts - appeal allowed - decided in favor of appellant.
Issues: Denial of Cenvat credit on supplementary invoices.
Analysis: The appellant appealed against the denial of Cenvat credit on supplementary invoices issued by their sister unit due to non-payment of service tax in time. The sister unit later paid the service tax along with a penalty, leading to the denial of Cenvat credit under Rule 9(1) BB of the Cenvat Credit Rules, 2004. The appellant argued that since the sister unit rectified the payment issue and issued supplementary invoices, they should be entitled to the Cenvat credit. The appellant cited precedents like the case of Indian Oil Corporation Limited to support their claim that denial of credit without proven fraud or suppression of facts is not justified. The Tribunal analyzed the issue of whether the appellant could avail Cenvat credit based on the supplementary invoices issued by the service provider who paid the service tax under Section 73(4A) of the Finance Act, 1994. The Tribunal noted that the proviso to Section 73(4A) aimed at settling disputes and did not establish fraud or suppression of facts. Referring to the Indian Oil Corporation Limited case, the Tribunal emphasized that without proven fraud or suppression, denial of Cenvat credit was unwarranted. The Tribunal highlighted a similar case involving Chennai Petroleum Corporation Limited, where the Settlement Commission accepted duty payment without admitting fraud allegations, leading to immunity from penalties. The Tribunal concluded that mere allegations without proof did not justify denying Cenvat credit, as seen in the Bosch Chassis Systems India Ltd. case. Based on the legal precedents and the absence of proven fraud or suppression of facts, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The decision rested on the principle that settlement proceedings without established fraud did not warrant denial of Cenvat credit based on supplementary invoices. The judgment clarified that denial of credit should be based on concrete evidence of fraud or suppression, not mere allegations or settlement proceedings without admission of guilt. In conclusion, the Tribunal's decision favored the appellant, emphasizing the importance of proving fraud or suppression of facts to justify the denial of Cenvat credit based on supplementary invoices. The judgment underscored the need for concrete evidence before denying credit and highlighted the significance of settlement proceedings not equating to admission of guilt in cases involving duty payments and supplementary invoices.
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