2015 (2) TMI 873 - AT - Central Excise

CENVAT Credit - Credit taken on differential duty paid based on supplementary invoice - Held that - authorities reliance on the provisions of Rule 7(1)(b) of erstwhile Cenvat Credit Rules is not proper inasmuch as the said Rule debars availing the Cenvat credit on the basis of supplementary invoices, where such additional duty became recoverable from the manufacturers on account of non-levy or short levy by reasons of fraud, collusion, or any willful misstatement or suppression of facts or contravention of any provisions with intent to evade payment of duty. As such, it is clear that said Rule would be invokable only in case of malafide on the part of principal manufacturer. - admittedly the assessment at the end of principal manufacturer was provisional and was finalized by a final assessment order dated 27.8.2002. It is on account of finalization of the provisional assessment that the shortfall to the extent of ₹ 28,78 lakhs approximately was arrived at, which the principal manufacturer paid vide supplementary invoice dated 10.2.03. As such, we agree with the learned advocate that this is not a case of any suppressed production or malafide intent so as to invoke Rule 7(1)(b). - principal manufacturer has given a certificate to the extent that supplementary invoices raised on 10.2.03 relates to invoices mentioned in the list of original invoices, and enclosed as annexure A, there is no rebuttal to the said certificate - no justifiable reasons to uphold the impugned orders of the authorities below - Decided in favour of assessee.

Summary

Issues involved:
Dispute over availment of credit for duty paid by principal manufacturer under provisional assessments and subsequent finalization.

Analysis:
1. The appellant was a job worker for the principal manufacturer and availed credit of duty paid by them. The principal manufacturer finalized assessments resulting in a duty shortfall, which they paid under a supplementary invoice, and the appellant utilized this credit for clearing final products.
2. The Revenue disputed the credit availment, alleging that the duty payment was not voluntary and cannot be linked to the original invoices. Lower authorities denied the credit, along with interest and penalty, based on Rule 7(1)(b) of the Cenvat Credit Rules.
3. The Tribunal found that Rule 7(1)(b) is applicable only in cases of malafide intent by the principal manufacturer, which was not present in this case due to the provisional nature of the assessments and subsequent payment by the principal manufacturer upon finalization.
4. Referring to a previous Tribunal decision, it was noted that duty shortfall due to disputed adjudication does not amount to suppression, justifying the job worker's credit entitlement.
5. The principal manufacturer provided a certificate linking the supplementary invoices to the original invoices, which remained unrebutted, further supporting the appellant's case.
6. Consequently, the Tribunal set aside the lower authorities' orders, allowing the appeal and granting relief to the appellant. A miscellaneous application for stay extension was also disposed of during the proceedings.