2018 (7) TMI 83 - AT - Central Excise

CENVAT credit - duty paying documents - Rule 9(b) of CCR 2004 - credit was availed on the basis of supplementary invoices issued by DIPL wherein they have paid the differential duty pursuant to an offence case initiated against them - Held that - When the issue with regard to penalty imposed on DIPL has been set aside, the disallowance of credit alleging violation of Rule 9(b) of CENVAT Credit Rules, 2004 is without legal basis and requires to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Violation of Rule 9(b) of CENVAT Credit Rules, 2004 - Admissibility of CENVAT credit based on supplementary invoices - Suppression of facts with intent to evade payment of duty - Penalty imposition.

Analysis:
The case involved the appellant, engaged in manufacturing diesel generating sets, who availed CENVAT credit on duty paid on inputs, capital goods, and service tax paid on input services. The appellant availed credit based on supplementary invoices issued by their supplier manufacturer, DIPL, amounting to ?59,12,362. However, DIPL was involved in a case for non-payment of SAD, and a show cause notice was issued against them. Subsequently, DIPL paid the SAD and passed it on to the appellant through supplementary invoices. The issue revolved around the admissibility of the credit under Rule 9(b) of CENVAT Credit Rules, 2004, which states that credit recovered due to suppression of facts with intent to evade duty payment is not eligible through supplementary invoices.

The appellant contended that DIPL's penalty was set aside in a previous Tribunal order, indicating no suppression of facts warranting a penalty. The Tribunal's decision highlighted that the appellant disclosed all details of inputs cleared as such, and the duty liability was discharged promptly upon notification by officers. Consequently, the penalty on DIPL was deemed unwarranted, leading to a conclusion that the disallowance of credit based on Rule 9(b) lacked legal basis. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential relief.

In conclusion, the Tribunal's decision emphasized the importance of disclosing all relevant details and promptly addressing duty liabilities. The ruling clarified that when penalties on the supplier are overturned due to lack of intent to evade duty payment, the admissibility of credit for the appellant should also be upheld. The judgment underscored the need for adherence to legal provisions and proper documentation to avoid disputes regarding CENVAT credit eligibility.