2018 (8) TMI 549 - AT - Central Excise

CENVAT Credit - duty paying documents - supplementary invoices - Rule 9(1)(b) of the Cenvat Credit Rules - whether the Appellants are entitled to Cenvat Credit on the basis of supplementary invoices issued by the coal companies? - 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. 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. The Appellant is entitled to take Cenvat Credit on the supplementary invoices in question - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat Credit based on supplementary invoices.
2. Denial of credit under Rule 9(1)(b) of Cenvat Credit Rules.

Analysis:
1. The appeal stemmed from a case of undervaluation against a company for non-inclusion of various charges, leading to a demand under Central Excise Act, 1944. The company paid the differential duty but passed on the Cenvat Credit through supplementary invoices, triggering a dispute with the department.

2. The main contention revolved around the denial of Cenvat Credit by the department under Rule 9(1)(b) of the Cenvat Credit Rules, 2004. The rule denies credit if supplementary invoices are issued due to willful misstatement or suppression of facts. The Adjudicating Authority confirmed the demand, interest, and penalty, which was partially upheld by the Commissioner in the impugned order.

3. The crux of the issue was whether the Appellants were entitled to Cenvat Credit based on supplementary invoices issued by the coal companies, considering the exclusion clause of Rule 9(1)(b) of the Cenvat Credit Rules. The Tribunal referred to relevant legal provisions and past decisions to analyze the situation comprehensively.

4. The Tribunal noted that the demand against the coal company was pending before the Supreme Court, indicating a debatable issue regarding the liability of payment of Excise duty. Consistently, in several cases involving the same coal company, the Tribunal allowed Cenvat Credit, emphasizing the absence of fraud or suppression when the issue of liability was unresolved.

5. Referring to specific cases, the Tribunal highlighted that in situations where the liability of payment of duty was under dispute and pending adjudication before higher courts, the denial of Cenvat Credit on grounds of suppression was not tenable. Consequently, the Tribunal set aside the impugned order and allowed the appeal, affirming the Appellant's entitlement to take Cenvat Credit on the supplementary invoices in question.