2019 (1) TMI 171 - AT - Central Excise

CENVAT Credit - duty paying invoices - denial of credit availed on the basis of supplementary invoices issued by the manufacturer - Held that - Suppression being altogether contradictory to confusion cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record. 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 invoices have 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 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat Credit based on supplementary invoices issued by the manufacturer.
2. Interpretation of Rules 3 and 9 (1) (b) of Cenvat Credit Rules, 2004.
3. Consideration of previous tribunal decisions on similar matters.
4. Assessment of suppression and collusion in the case.
5. Entitlement of the appellant to avail Cenvat Credit on supplementary invoices.

Detailed Analysis:
1. The appeal challenged the denial of Cenvat Credit to the appellant based on supplementary invoices issued by the manufacturer. The appellant, a manufacturer of various products falling under specific chapters of the Central Excise Act, availed Cenvat Credit on excise duty paid on inputs, including coal for electricity generation. The Department alleged that the appellant wrongly availed credit amounting to ?18,80,841 based on supplementary invoices from South Eastern Coalfields Ltd. The dispute centered around the application of Rules 3 and 9 (1) (b) of the Cenvat Credit Rules, 2004, with the Department claiming the credit was barred due to an alleged intent to misuse it.

2. The appellant argued that previous tribunal decisions, such as Birla Corporation Ltd. vs. CGST, Jabalpur, supported their case by interpreting Rule 9 (1) (b) differently. They contended that pending matters related to South Eastern Coal Field Ltd. before the Honorable Apex Court created confusion, and mere failure to ascertain the exclusion clause of Rule 9 (1) (b) should not imply suppression or collusion. The appellant emphasized that the supplementary invoices were issued by government undertakings, requiring a rebuttal to presume any wrongdoing.

3. The Tribunal analyzed the arguments presented by both parties and considered the previous decisions on similar matters. Noting the pendency of related cases before the Honorable Supreme Court, the Tribunal observed that confusion due to sub-judice issues could not be equated with suppression. The Tribunal highlighted that without a positive act indicating suppression or collusion, mere failure to verify the exclusion clause should not lead to adverse implications. Referring to a specific Tribunal decision, the Tribunal allowed the appeal, emphasizing the recurring nature of the issue and the absence of fraud or suppression.

4. Ultimately, the Tribunal set aside the order denying Cenvat Credit and allowed the appeal, granting parties the liberty to revisit the matter after a final verdict from the Honorable Supreme Court if necessary. The decision was based on the absence of evidence of fraud or suppression, the recurring nature of the issue, and the specific circumstances surrounding the issuance of supplementary invoices by government undertakings.

5. The judgment highlights the importance of interpreting Cenvat Credit Rules, considering precedents, assessing suppression and collusion allegations, and determining the entitlement of appellants to avail credit based on supplementary invoices. The decision underscores the need for clarity in legal interpretations, especially in cases involving government entities and pending legal matters.