2025 (1) TMI 65 - AT - Central Excise

Availment of CENVAT credit - revision in rate of service (escalation of price) - violation of Rule 4A (1) of the Service Tax Rules, 1994 read with Rule 9(1)(f) of the CENVAT Credit Rules, 2004 - denial of Cenvat credit on the ground that the additional invoices were issued by the service providers much after the period of 14 days of completion of service - HELD THAT - The CENVAT Credit availed by the appellant on the basis of supplementary invoices were rejected by the Ld. adjudicating authority on the ground that the said invoices were not issued within 14 days from from the date of completion of service or receipt of payment, whichever is earlier. It is observed that the issue is no more res integra as this Tribunal in M/S. USHA MARTIN LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, JAMSHEDPUR 2023 (5) TMI 719 - CESTAT KOLKATA by relying on Hon ble Madras High Court s ruling 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 held that CENVAT credit cannot be denied to the service recipient on the ground that invoice was not issued by the service provider. In Usha Martin Limited by relying on M/S DELPHI AUTOMOTIVE SYSTEMS (P) LIMITED VERSUS CCE, NOIDA 2013 (12) TMI 156 - CESTAT NEW DELHI this tribunal has held that for the period prior to 01.04.2011, as Rule 9(1) did not make any distinction between invoice or supplementary invoice in respect of services, therefore, the term invoice in Rule 9(1)(f) of the CENVAT Credit Rules, 2004 has to be treated including supplementary invoice . Conclusion - There is no dispute regarding the payment duty on the supplementary invoices. Also, there is also no dispute regarding the receipt of input services and using the same towards manufacture of dutiable goods. Thus, CENVAT credit cannot be denied to the Appellant on the basis of procedural irregularities, if any. The impugned order is set aside - appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the CENVAT credit availed by the appellant on the basis of supplementary invoices issued beyond the prescribed period of 14 days from the date of completion of service or receipt of payment is admissible.
Whether Rule 9(1)(f) of the CENVAT Credit Rules, 2004, which prescribes the documents required for availing credit, can be interpreted to include supplementary invoices.
Whether the denial of CENVAT credit based on procedural irregularities, particularly the timing of invoice issuance, is justified.
Whether the appellant is liable for interest and penalties due to the availed CENVAT credit.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Admissibility of CENVAT Credit on Supplementary Invoices

Relevant legal framework and precedents: The relevant rules are Rule 4A(1) of the Service Tax Rules, 1994, and Rule 9(1)(f) of the CENVAT Credit Rules, 2004. The Tribunal referenced precedents such as Usha Martin Limited vs. Commissioner of Central Excise & Service Tax, Jamshedpur, and JSW Steels Ltd., which held that the time period prescribed for invoice issuance is directory, not mandatory.
Court's interpretation and reasoning: The court found that the obligation to issue invoices timely rests on the service provider, not the recipient. The period prescribed is directory, not mandatory, thus the appellant cannot be penalized for the service provider's delay.
Key evidence and findings: The appellant had received the services and paid the service tax as evidenced by the supplementary invoices, which were issued due to price escalations.
Application of law to facts: The Tribunal applied the principle that procedural lapses by the service provider do not justify denying credit to the service recipient.
Treatment of competing arguments: The Tribunal dismissed the department's argument that supplementary invoices are inadmissible due to timing, emphasizing that the rules do not distinguish between invoices and supplementary invoices for services.
Conclusions: The Tribunal concluded that CENVAT credit should not be denied on the basis of supplementary invoices issued beyond the 14-day period.

Issue 2: Interpretation of Rule 9(1)(f) of the CENVAT Credit Rules, 2004

Relevant legal framework and precedents: Rule 9(1)(f) was examined alongside precedents such as Delphi Automotive, which held that the term "invoice" includes "supplementary invoice."
Court's interpretation and reasoning: The Tribunal interpreted Rule 9(1)(f) to include supplementary invoices, as there was no distinction made in the rules for services prior to 01.04.2011.
Key evidence and findings: The Tribunal noted that service tax was paid on supplementary invoices and services were duly received and used.
Application of law to facts: The Tribunal applied the interpretation that supplementary invoices are valid for CENVAT credit, aligning with the legislative intent and previous rulings.
Treatment of competing arguments: The Tribunal rejected the department's reliance on Rule 9(1)(b), which pertains to goods, not services.
Conclusions: The Tribunal concluded that Rule 9(1)(f) includes supplementary invoices, thus supporting the appellant's claim for CENVAT credit.

Issue 3: Liability for Interest and Penalties

Relevant legal framework and precedents: The Tribunal considered the implications of procedural irregularities on penalties and interest, referencing the Hindalco Industries case.
Court's interpretation and reasoning: The Tribunal held that since the credit availed was legal and proper, the question of interest and penalties does not arise.
Key evidence and findings: There was no dispute regarding the payment of duty and receipt of services.
Application of law to facts: The Tribunal applied the principle that procedural lapses should not result in penalties if the substantive tax obligations are met.
Treatment of competing arguments: The Tribunal dismissed the department's argument for penalties based on procedural grounds.
Conclusions: The Tribunal concluded that no interest or penalties should be imposed on the appellant.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "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."
Core principles established: The Tribunal established that procedural requirements related to invoice issuance are directory, not mandatory, and that supplementary invoices are valid for CENVAT credit.
Final determinations on each issue: The Tribunal set aside the impugned order, allowing the appellant's appeal and confirming the legality of the availed CENVAT credit without penalties or interest.

In conclusion, the Tribunal's decision underscores the importance of substantive compliance over procedural formalities in the context of availing CENVAT credit, aligning with established judicial precedents.

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