2018 (8) TMI 449 - AT - Central Excise

CENVAT Credit - duty paying documents - supplementary invoices issued by the Coal Companies - Rule 9 (1) (b) of Cenvat Credit Rules - matter pending adjudication - Held that - The connected matters of South Eastern Coal Field Ltd. are pending adjudication before the Hon ble Apex Court. Issue being already sub-judiced the element of confusion cannot be ruled out. Suppression being altogether contradictory to Confusion , the same cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record amounting suppression of fact. Mere failure of ascertaining about the exclusion part of Rule 9 (1) (b) cannot be held to be the act of suppression or collusion on part of the appellant. Above all, the supplementary invoice has been issued by the Coal Companies which are the undertakings of the Government of India, there can be no presumption, unless rebutted, of any alleged suppression or collusion. It is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon ble Apex Court - the issue of wrong availment on part of M/s SECL is still a debatable issue. In such circumstances, the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Admissibility of Cenvat Credit on supplementary invoices under Rule 9 (1) (b) of Cenvat Credit Rules.

Detailed Analysis:
The judgment deals with the issue of the admissibility of Cenvat Credit on supplementary invoices under Rule 9 (1) (b) of Cenvat Credit Rules. The appellants, engaged in the manufacture of clinker, availed Cenvat Credit based on supplementary invoices issued by M/s. SECL, a coal company. The Department denied the credit, leading to a show cause notice and subsequent confirmation of the denial by the Original Adjudicating Authority and the Commissioner (Appeals). The main contention was whether the appellants were entitled to avail the credit given the pendency of adjudication against M/s. SECL before the Hon’ble Apex Court.

The appellant argued that similar matters had been decided in their favor previously and that the issue of valuation was subjudiced before the Hon’ble Apex Court. They contended that the show cause notice against M/s. SECL should not be the sole criteria for disallowing the credit. On the other hand, the Department argued that the appellant failed to ascertain the absence of misconduct or suppression of facts, as per Rule 9 (1) (b) of Cenvat Credit Rules, especially considering the show cause notice issued to M/s. SECL before the credit availed by the appellant.

The Tribunal observed that the key issue was the entitlement of the appellants to avail Cenvat Credit based on the supplementary invoices from Coal Companies, particularly M/s. SECL. Noting that matters related to SECL were pending before the Hon’ble Apex Court, the Tribunal highlighted the distinction between suppression and confusion. It was emphasized that mere failure to ascertain exclusion under Rule 9 (1) (b) did not amount to suppression or collusion. Moreover, since the supplementary invoices were issued by government undertakings, any presumption of suppression or collusion needed to be rebutted.

Referring to previous Tribunal decisions, the Tribunal found no element of fraud or suppression on the part of the appellant and recognized the recurring nature of the issue. The Tribunal allowed the appeal, stating that the appellant was entitled to take Cenvat Credit on the disputed supplementary invoices. Despite the prior show cause notice to M/s. SECL, the unresolved nature of the demand against SECL and its challenge before the Hon’ble Apex Court indicated that the issue of wrong availment was debatable, absolving the appellant of any suppression.

In conclusion, the Tribunal accepted the appellant’s arguments and allowed the appeal, granting them the benefit of Cenvat Credit on the disputed supplementary invoices.