2022 (3) TMI 587 - AT - Central Excise

CENVAT Credit - duty paying invoices - supplementary invoices issued by the Public Sector Undertaking - South Eastern Coalfield Limited, wherein the excise duty was charged on items - HELD THAT - In view of the facts and circumstances that it was the practice in the coal company that excise duty is not chargeable on royalty etc. these items being in the nature of levy of tax or fee, they were not charging excise duty. The SECL (a PSU) charged duty on royalty, cess etc. vide supplementary invoice only on substantial dispute raised by the Central Excise Department. The coal company started charging excise duty on these items which is sub-judice before the higher Courts. In this view of the matter, it is held that there is no element of fraud, suppression etc. disabling taking cenvat credit in terms of Rule 9 of Cenvat Credit Rule. The appellant is entitled to take cenvat credit on the basis of supplementary invoice raised - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant rightly took cenvat credit on supplementary invoices issued by a Public Sector Undertaking, including excise duty on various items like Royalty, Stowing Excise Duty, Forest Cess, Terminal Tax, etc.

Analysis:

Issue 1: Cenvat Credit on Supplementary Invoices
The appellant, a sponge iron manufacturer, had coal linkage with a Public Sector Undertaking (SECL) for coal supply. Initially, SECL did not charge excise duty on additional levies like royalty, cess, etc., in the invoices. However, due to the Excise Department's insistence that these levies form part of the coal cost and excise duty should be paid on them, SECL issued supplementary invoices charging excise duty on these items for past clearances. The appellant paid the excise duty and claimed cenvat credit. The Revenue issued a show cause notice alleging that taking cenvat credit based on supplementary invoices was impermissible under Rule 9 of Cenvat Credit Rules due to elements like fraud or suppression. The dispute arose as SECL started charging excise duty on these items following the Revenue's demand, which was also sub-judice before higher courts.

Issue 2: Adjudication and Appeals
The Revenue's show cause notice led to an adjudication confirming the disallowance of cenvat credit along with penalties. The appellant appealed to the Commissioner (Appeals), who upheld the decision. Subsequently, the appellant approached the Tribunal challenging the decision.

Issue 3: Arguments and Rulings
The appellant contended that there was no malafide intent or suppression in the supplementary invoices and that historically, excise duty was not levied on items like royalty by SECL. The appellant cited a Tribunal ruling acknowledging the ongoing dispute between coal companies and Revenue on excise duty applicability. On the other hand, the Revenue representative supported the impugned order.

Judgment
After considering the contentions and the historical practice where excise duty was not charged on royalty-like items by SECL, the Tribunal found no fraud or suppression justifying the disallowance of cenvat credit under Rule 9. The Tribunal set aside the impugned order, allowing the appeal and permitting the appellant to claim cenvat credit based on the supplementary invoices. The appellant was deemed entitled to the cenvat credit, and the appeal was allowed accordingly.