2017 (10) TMI 700 - AT - Central Excise

CENVAT credit - Reverse Charge Mechanism - Duty paying documents - applicability of Rule 9 (1)(b) of the CCR, 2004 - Held that - the said rule is invokable only for Cenvat Credit availed on the strength of supplementary invoices issued by manufacturer or importer of excisable goods for inputs or capital goods. The said rule is not applicable to the services received - admittedly, the issue in the present case is that the appellant has availed Cenvat Credit of Service Tax paid for the services received from a service provider located outside India under reverse charge mechanism in terms of Section 66 of the Finance Act, 1994 - the provisions of Rule 9(1)(b) of CCR, 2004 are not invokable - the appellant has correctly availed the Cenvat Credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Rule 9(1)(b) of Cenvat Credit Rules, 2004 to services received from outside India
2. Denial of Cenvat Credit based on statements without cross-examination

Analysis:

Issue 1: Applicability of Rule 9(1)(b) of Cenvat Credit Rules, 2004 to services received from outside India

In the first case, the appellant appealed against the denial of Cenvat Credit and imposition of penalties based on the reversal of Cenvat Credit availed on services received from outside India. The Revenue contended that Rule 9(1)(b) of the Cenvat Credit Rules, 2004 was violated as the appellant availed credit based on TR-6 Challans after the services were received. However, the appellant argued that Rule 9(1)(b) pertains to inputs/capital goods, not services from outside India. The Tribunal analyzed Rule 9(1)(b) and concluded that it applies to supplementary invoices for excisable goods, not services. As the appellant availed credit for services under reverse charge mechanism, the rule was deemed inapplicable. Consequently, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.

Issue 2: Denial of Cenvat Credit based on statements without cross-examination

In the second case, the appellants contested the denial of Cenvat Credit based on statements without the opportunity for cross-examination. The investigation revealed discrepancies where invoices were issued without goods being supplied. The appellants requested cross-examination of witnesses, citing a violation of natural justice. The Tribunal noted that while one appellant admitted non-receipt of goods for a specific period, other demands required further scrutiny. It held that cross-examination of witnesses, including the main supplier, was essential for fair adjudication. The Tribunal upheld the denial of credit for the admitted period, imposing penalties accordingly. For the remaining demands, the matter was remanded to the adjudicating authority for proper examination post cross-examination. Ultimately, specific penalties were confirmed, and the appeals were disposed of accordingly.

These judgments highlight the importance of correctly applying rules to specific situations and ensuring procedural fairness in adjudication processes.