2018 (9) TMI 906 - AT - Central Excise

CENVAT credit - duty paying invoices issued by the Coal Companies - supplementary invoices - Rule 9 (1) (b) of Cenvat Credit Rules - suppression of facts or not? - Held that - It has been specifically noted that the connected matters of South Eastern Coal Field Ltd. are pending adjudication before the Hon ble Apex Court - Issue being already sub-judiced the element of confusion cannot be ruled out. Suppression being altogether contradictory to Confusion , the same cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record amounting suppression of fact. It is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon ble Apex Court. It is clear to hold that the issue of wrong availment on part of M/s SECL is still a debatable issue - the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Entitlement to avail Cenvat Credit on supplementary invoices issued by Coal Companies; Interpretation of Rule 9 (1) (b) of Cenvat Credit Rules; Allegations of suppression or collusion against the appellant.

Analysis:
The case involved the appellants engaged in the manufacture of clinker under Chapter 25 of the Central Excise Act, with a dispute arising from availing Cenvat Credit based on supplementary invoices from M/s. SECL. The Department denied the credit under Rule 9 (1) (b) of Cenvat Credit Rules, leading to a show cause notice and subsequent confirmation of recovery by the Original Adjudicating Authority and Commissioner (Appeals).

During the hearing, the appellant argued that the main valuation issue was pending before the Apex Court and cited previous decisions in their favor. Conversely, the Department contended that the pendency of the issue with SECL did not justify the appellant's actions, emphasizing the appellant's duty to ascertain any misconduct or suppression of fact as per Rule 9 (1) (b).

The Tribunal noted the central issue of entitlement to Cenvat Credit on Coal Companies' supplementary invoices, highlighting the pending adjudication involving SECL. The Tribunal differentiated between 'suppression' and 'confusion,' stating that mere failure to ascertain did not amount to suppression, especially considering the government undertakings issuing the invoices.

Referring to previous Tribunal decisions, the Tribunal emphasized the absence of fraud or suppression by the appellant and the recurring nature of the issue, ultimately allowing the appeal and granting the appellant relief to avail Cenvat Credit on the disputed invoices.

Despite the show cause notice to SECL preceding the appellant's credit availment, the Tribunal deemed the issue debatable due to the pending challenge before the Apex Court, concluding that the appellant's actions did not constitute suppression under Rule 9 (1) (b) of Cenvat Credit Rules. Consequently, the Tribunal accepted the appellant's arguments and allowed the appeal.