2024 (11) TMI 712 - AT - Central Excise

Recovery of the cenvat credit availed by the appellant against three supplementary invoices pertaining on the differential duty paid by the job worker - Rule 9(1)(b) of Cenvat Credit Rules, 2004 - HELD THAT - The job worker after payment of differential duty issued supplementary invoices to the appellant who have availed cenvat credit on the said documents. Even though initially adjudication order confirmed the demanded amount with interest invoking suppression of facts against the job-worker, later on appeal, the same was set aside. On appeal by the job-worker against the confirmation of demand, it has been now held by the Tribunal in favour of the job-worker by dropping the demand and upheld by the Hon ble Supreme Court holding that the method of valuation adopted by the job worker is in order. Since the demand being not sustainable against the job-worker, the recovery of cenvat credit on the ground of suppression in making the differential duty payment from the appellant is unsustainable. The impugned order is set aside and the appeal is allowed.

Summary

Issues:
- Appeal against Order-in-Original passed by Commissioner of Central Excise and Service Tax, Mangalore.
- Availment of cenvat credit on supplementary invoices issued by job worker.
- Denial of cenvat credit by adjudicating authority.
- Allegation of suppression of facts and evasion of duty.
- Tribunal and Supreme Court judgments in favor of job worker.
- Entitlement of appellant to cenvat credit on supplementary invoices.

Analysis:
The appeal was filed against Order-in-Original No.19/2010 passed by the Commissioner of Central Excise and Service Tax, Mangalore. The case involved the appellant, engaged in manufacturing detergent powder and cake, availing cenvat credit on inputs, including Linear Alkyl Benzene Sulphonic Acid (LABSA), converted into LABSA through a job worker. The job worker faced show-cause notices for differential duty, paid the duty, and issued supplementary invoices to the appellant. The appellant availed cenvat credit on these invoices. A subsequent show-cause notice was issued to the appellant for recovery of cenvat credit availed on the supplementary invoices, which was confirmed by the adjudicating authority, leading to the present appeal.

The key issue for determination was whether the appellant was entitled to avail cenvat credit on the supplementary invoices issued by the job worker post payment of differential duty. The Tribunal and the Hon'ble Supreme Court had ruled in favor of the job worker, holding that the method of valuation adopted by the job worker was lawful. As the demand against the job worker was dropped, the recovery of cenvat credit from the appellant based on alleged suppression of facts was deemed unsustainable. The appellant's advocate confirmed that the job worker did not claim a refund following the Tribunal's order upheld by the Supreme Court.

The denial of cenvat credit to the appellant was based on Rule 9(1)(b) of the Cenvat Credit Rules 2004, which outlines conditions for issuing supplementary invoices. The Tribunal's decision in favor of the job worker and the subsequent validation by the Supreme Court indicated that the appellant's availing of cenvat credit on the supplementary invoices was legitimate. Therefore, the impugned order denying the cenvat credit to the appellant was set aside, and the appeal was allowed with any consequential relief as per law.