2018 (8) TMI 474 - AT - Central Excise

CENVAT Credit - duty paying documents - supplementary invoices - exclusion clause of Rule 9(1)(b) of Cenvat Credit Rules, 2004 - issue pending adjudication before Supreme Court - suppression of facts or not? Whether the Appellants are entitled to Cenvat Credit on the basis of supplementary invoices issued by the coal companies and whether the said credit stands denied in terms of Rule 9(1)(b) of the Cenvat Credit Rules which denies the credit if the supplementary invoices are issued for duties which became payable by the manufacturer on account of willful misstatement or suppression of facts on their part? Held that - It is an admitted position that demand raised by the department against M/s. SECL is under challenge before the Hon ble Supreme Court and therefore the Cenvat credit can be availed by the manufacturer on the strength of supplementary invoice since such amount of duty cannot be said to be paid on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty - a consistent view has been taken by this Tribunal on this issue in favour of the Assessee in a number of decisions. In the case of M/S BIRLA CORPORATION LTD. VERSUS CGST, CC & CE, JABALPUR 2018 (7) TMI 1264 - CESTAT NEW DELHI , in identical set of facts involving the same coal company i.e. M/s. SECL, this Tribunal has allowed the Cenvat Credit holding that there cannot be suppression of fact when the issue of liability of payment of Excise duty at the end of the coal companies was a debatable issue which is pending adjudication before the Hon ble Supreme Court. Appellant is entitled to take Cenvat Credit on the supplementary invoices in question - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat Credit on supplementary invoices.
2. Application of Rule 9(1)(b) of Cenvat Credit Rules, 2004.

Entitlement to Cenvat Credit on Supplementary Invoices:
The appeal was filed against an order passed by the Commissioner regarding undervaluation charges against a company for non-inclusion of various charges like Royalty, Excise duty, etc. The company had paid the differential duty but passed on the Cenvat Credit through supplementary invoices. The department contended that such supplementary invoices fell under the exclusion clause of Rule 9(1)(b) of Cenvat Credit Rules, 2004. The Adjudicating Authority confirmed the demand and penalty, which was upheld by the Commissioner. The Appellant argued that the demand of duty on charges like royalty was pending before the Supreme Court, making the denial of Cenvat credit on grounds of fraud not valid. Citing a similar case, the Appellant sought relief based on the pending adjudication. The issue was whether the Appellants were entitled to Cenvat Credit based on supplementary invoices issued by coal companies.

Application of Rule 9(1)(b) of Cenvat Credit Rules, 2004:
The Tribunal referred to Rule 9(1)(b) which denies credit if supplementary invoices are issued due to willful misstatement or suppression of facts. It was noted that the demand against the coal company was under challenge before the Supreme Court, allowing the manufacturer to avail Cenvat credit on supplementary invoices. Several decisions by the Tribunal favored the Assessee in similar cases involving the same coal company. The Tribunal highlighted that the issue of liability of payment of Excise duty was debatable and pending adjudication before the Supreme Court. Rulings in various cases supported the allowance of Cenvat Credit in such scenarios. Ultimately, the Tribunal set aside the impugned order, allowing the Appeal and confirming the entitlement of the Appellant to take Cenvat Credit on the supplementary invoices in question.

This detailed analysis of the legal judgment showcases the arguments presented, the application of relevant rules, and the Tribunal's decision based on previous rulings and the pending adjudication before the Supreme Court.