2006 (5) TMI 31 - AT - Central Excise

Central Excise Cenvat credit Job worker issued supplementary invoice for differential duty on account of fact that initially duty was paid on job work charges only and differential duty on basis of entire values of goods and paid voluntarily - No case of suppression or misstatement of facts - Credit on supplementary invoice is allowable

Summary

Issues:
- Interpretation of Rule 7 (1) (b) of Cenvat Credit Rules, 2002 regarding availing cenvat credit based on supplementary invoices.
- Discrepancy in payment of differential Central Excise duty by job worker leading to disallowance of cenvat credit.
- Dispute over whether the short payment of duty by job worker constitutes fraud or suppression of facts.
- Applicability of Supreme Court judgment in M/s. International Auto Ltd. Vs. CCE -2005 on non-levy or short levy.
- Nature of transaction between appellant and job worker and its impact on availing cenvat credit.

Analysis:
The appeal before the Appellate Tribunal, Bangalore, stemmed from a dispute regarding the availing of cenvat credit based on supplementary invoices issued by the job worker. The Department issued a Show Cause Notice disallowing the credit due to the job worker's payment of differential Central Excise duty on past period offenses. The Original Authority found the duty was paid to suppliers and not due to evasion, dropping proceedings. However, the Commissioner (A) reversed this decision, citing Rule 7 (1) (b) of Cenvat Credit Rules, stating that the supplementary invoice did not allow credit for recoverable duty due to fraud or suppression. The appellant contested this interpretation, arguing the duty was paid voluntarily by the job worker, not to evade payment. They also highlighted a Supreme Court case and the independent nature of the transaction with the job worker.

The Tribunal analyzed the situation, noting that the job worker paid differential duty voluntarily upon clarification, not due to fraudulent intent. They observed inconsistencies in the Department's stance and referenced the Supreme Court case where duty was not payable on inputs not claimed as credit. Additionally, they mentioned setting aside an Order-in-Original related to job work. As there was no stay on the Tribunal's decision, the Tribunal found the Order-in-Appeal lacking merit and allowed the appellant's appeal. The Tribunal's decision was pronounced at the conclusion of the hearing.