2018 (8) TMI 952 - AT - Central Excise

CENVAT Credit - duty paying invoices - supplementary invoices - Rule 9(1)(b) of Cenvat Credit Rules, 2004 - non-inclusion of Royalty charges/Stowing Excise duty, Paryavaran Upkar, Vikas upkar, forest fee, entry tax etc. - 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 CCR 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. 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 based on supplementary invoices.
2. Interpretation of Rule 9(1)(b) of Cenvat Credit Rules regarding denial of credit for duties due to willful misstatement or suppression of facts.

Issue 1: Entitlement to Cenvat Credit based on supplementary invoices:
The appeal was filed against an order confirming a demand for undervaluation against a coal company for non-inclusion of various charges. The company paid the differential duty but passed on Cenvat Credit through supplementary invoices. The department issued a show cause notice for recovery of wrongly taken Cenvat Credit. The Adjudicating Authority and Commissioner upheld the recovery. The appellant argued that since the demand against the coal company was pending before the Supreme Court, denial of Cenvat credit was not justified. The Tribunal cited various cases where credit was allowed in similar situations. It was held that as long as the duty payment issue is debatable and pending before the Supreme Court, there is no suppression of facts, and Cenvat Credit can be availed based on the supplementary invoices.

Issue 2: Interpretation of Rule 9(1)(b) of Cenvat Credit Rules:
The key provision in question was Rule 9(1)(b) of the Cenvat Credit Rules, which denies credit if supplementary invoices are issued due to willful misstatement or suppression of facts. The Tribunal referred to multiple cases where it allowed Cenvat Credit for coal companies facing similar challenges with duty payments pending before the Supreme Court. It emphasized that as long as the issue of Excise duty liability is debatable and under Supreme Court adjudication, there is no suppression of facts, and credit based on supplementary invoices cannot be denied. The Tribunal consistently ruled in favor of the Assessee in such cases, highlighting the recurring nature of the issue and the lack of fraudulent intent.

In conclusion, 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 issued by the coal company. The decision was based on the debatable nature of the duty payment issue pending before the Supreme Court, aligning with previous rulings in similar cases.