2018 (11) TMI 1198 - AT - Central Excise

CENVAT Credit - duty paying documents - supplementary invoices - Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000 - Held that - Rule 9(1) (b) of the Cenvat Credit Rules, 2004 prescribes that Cenvat Credit on supplementary invoices involving sale of goods is denied in the circumstances where suppression of facts, mis-statements etc. are involved. In the present case, there is no sale of goods, but the differential duty was paid on the stock-transfer of goods by M/s. Jai Balaji Sponge Ltd. to the appellant - the Cenvat Credit cannot be denied on the supplementary invoices issued to the sister concern for the differential duty paid. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Valuation of goods for Cenvat Credit
- Validity of supplementary invoices for availing Cenvat Credit
- Interpretation of Rule 9(1) (b) of Cenvat Credit Rules, 2004

Valuation of goods for Cenvat Credit:
The appellant, engaged in manufacturing steel products, procured raw materials from various sources, including a sister unit. A Show Cause Notice alleged undervaluation, leading to the demand of Cenvat Credit, interest, and penalty. The appellant contended that they availed Cenvat Credit based on supplementary invoices from the sister unit, issued in compliance with Central Excise Valuation Rules. The Department argued that the duty should have been paid at a higher rate due to the relationship between the appellant and the sister unit. The Tribunal noted that the sister unit initially paid duty based on sales price to independent buyers but later paid differential duty as per the revised assessable value, resulting in the issuance of supplementary invoices to the appellant.

Validity of supplementary invoices for availing Cenvat Credit:
The appellant argued that the duty-paying documents were submitted to the Department, and it was a case of stock transfer between factories of the same manufacturer. The Department contended that the supplementary invoices were not valid for availing Cenvat Credit under Rule 9(1) (b) of Cenvat Credit Rules, as they involved recoverable duty due to fraud, collusion, or misstatement. The Tribunal observed that there was no sale of goods, only a transfer of goods with differential duty paid by the sister unit, which allowed the appellant to avail Cenvat Credit.

Interpretation of Rule 9(1) (b) of Cenvat Credit Rules, 2004:
The Tribunal considered the applicability of Rule 9(1) (b) of Cenvat Credit Rules, which denies Cenvat Credit on supplementary invoices involving suppression of facts or misstatements. Relying on a judgment of the Karnataka High Court, the Tribunal concluded that the situation was revenue-neutral, and the Cenvat Credit could not be denied on the supplementary invoices issued for the differential duty paid. Consequently, the impugned order was set aside, and the appeal by the appellant was allowed.