2023 (5) TMI 719 - AT - Central Excise

CENVAT Credit - disallowed on supplementary invoices - levy of equivalent Penalty - period in dispute involved is August 2008 and September 2008 - whether cenvat credit is admissible to a service recipient if an invoice has been issued by the service provider much later than 14 days after the date of completion of service/receipt of payment as prescribed in Rule 4A(1) of the ST Rules? - HELD THAT - The issue in dispute is no longer res integra as it stands settled in favour of the Appellant by decision of the Hon ble Madras High Court in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. JSW STEELS LTD., THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, 2017 (8) TMI 592 - MADRAS HIGH COURT where it was held that Rule 4A of the Service Tax Rules, 1994, inter alia, at the relevant time, required the provider of taxable service, to issue, not later than fourteen days from the date of provisioning of taxable service, an invoice, bill or challan. The details, which were to be provided in such an invoice, bill or challan, are also set out in the Rule. Thus, cenvat credit cannot be disallowed in the hands of the service recipient by invoking Rule 4A (1) of the ST Rules even if the service provider issues such invoice beyond the prescribed period of 14days from the date of completion of service/receipt of payment. The obligation to issue the invoice timely has been cast on the service provider and not the service recipient. Moreover, the period prescribed in the said Rule is directory and not mandatory as has been held by the Hon ble High Court. Whether the supplementary invoices are specified documents in terms of Rule 9(1)(f) of CCR 2004? - HELD THAT - This issue is also no longer res-integra asit is settled by the decision of the co-ordinate Bench of this Tribunal in M/S DELPHI AUTOMOTIVE SYSTEMS (P) LIMITED VERSUS CCE, NOIDA 2013 (12) TMI 156 - CESTAT NEW DELHI where it was held that supplementary invoice evidencing payment of additional duty amount is not to be treated on a different footing vis-a-vis the original invoice evidencing original payment of duty as both these documents were issued under the same provisions of law. The submission is also agreed upon that during the period in dispute there was no restriction for availing cenvat credit and such credit would be admissible even assuming that the tax that has been paid by the service provider is due to deliberate evasion on his part for the period prior to 01.04.2011. The impugned order cannot be sustained and thus, the same is set aside. The demand for recovery of CENVAT Credit, interest and penalty are set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are disallowance of CENVAT Credit on supplementary invoices, imposition of penalty, and the applicability of Rule 4A(1) of the Service Tax Rules 1994 and Rule 9(2) of the CENVAT Credit Rules 2004.

Disallowed CENVAT Credit on Supplementary Invoices:
The appeal was filed against the disallowance of CENVAT Credit by the Commissioner on supplementary invoices issued by an unregistered service provider after getting registered. The Commissioner disallowed the credit citing violation of Rule 4A(1) of the Service Tax Rules 1994 and Rule 9(2) of the CENVAT Credit Rules 2004. The Commissioner also imposed a penalty under Section 11AC of the Central Excise Act, 1944, alleging willful intention to evade payment of excise duty. The appellant argued that the obligation to issue invoices timely rests on the service provider, not the recipient, and relied on relevant case laws supporting their position. The Tribunal held in favor of the appellant, citing precedents and ruled that the credit cannot be disallowed based on the delayed issuance of invoices by the service provider.

Validity of Supplementary Invoices for CENVAT Credit:
The issue of whether supplementary invoices qualify as specified documents for availing CENVAT Credit under Rule 9(1)(f) of the CENVAT Credit Rules 2004 was also addressed. The Tribunal referred to a previous decision and concluded that during the relevant period, there was no distinction between an 'invoice' and a 'supplementary invoice' for availing credit. The Tribunal further emphasized that there was no restriction on availing CENVAT Credit during the disputed period, even if the tax paid was due to deliberate evasion by the service provider. Citing relevant case laws, the Tribunal held that the impugned order disallowing the credit and imposing penalties was not sustainable, setting it aside and allowing the appeal with consequential relief.

Conclusion:
The Tribunal ruled in favor of the appellant, setting aside the disallowance of CENVAT Credit on supplementary invoices and the imposed penalty. The judgment highlighted the distinction between the obligations of the service provider and the service recipient regarding timely issuance of invoices. Additionally, it clarified the admissibility of CENVAT Credit on supplementary invoices during the disputed period, emphasizing the absence of restrictions on such credit. The decision was based on legal precedents and interpretations of relevant rules and regulations, providing relief to the appellant in this case.