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2022 (12) TMI 973 - AT - Central ExciseCENVAT Credit - duty paying documents - supplementary invoices issued by their Tuticorin unit - suppression of facts or not - HELD THAT - It can be noted from the Rule 57AE(1)(i) of Central Excise Rules,1994 that Cenvat credit on supplementary invoices can be denied only if duty become recoverable from the manufacturer on account of any non-levy or short levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provisions of the Act and Rules made thereunder with intent to evade payment of duty. In the present matter the Learned Commissioner in his impugned order observed that the adjudicating authority having jurisdictional over the supplier unit at Tuticorin, has clearly established that the unit at Tuticorin suppressed facts with intent to evade payment of differential duty before the department conducted Cost Audit and unearthed the evasion. As per the observation of the learned Commissioner, the Tuticorin unit of the appellant had short paid the duty by reason of suppression of fact, fraud, collusion or wilful mis-statement, etc. As per Rule 57AE, the Cenvat credit on the supplementary invoice was allowed however, an exception is provided that if at the supplier s end the duty paid which was earlier short paid or non-paid by reason of suppression of fact, fraud, collusion or wilful mis-statement, etc, the supplementary invoice issued in respect of that duty shall not be admissible for allowing the credit at the recipient s end. Now, the only fact to be verified is that whether the duty paid by the Tuticorin unit of the appellant was short paid or non-paid due to reason of suppression of fact, fraud, collusion or wilful mis-statment, etc. The adjudicating authority in the present case who has passed the impugned order is not competent to decide that whether the duty paid by the supplier unit is due to reason of suppression of fact, fraud, collusion or wilful mis-statement, etc. It is seen that the demand of duty on the Tuticorin unit was not confirmed by invoking proviso to Section 11A(1). Moreover, though the penal provision of Section 11AC was operative during the period May, 1997 to June, 2000 but the same was neither invoked in the show cause notice nor confirmed in the adjudication order dated 30.03.2017. With this undisputed fact, it is absolutely clear that the duty paid by the appellant is against the duty demand made from the Tuticorin unit for which there is no charge of suppression of fact, fraud, collusion or wilful mis-statement, etc. exist and there was no adjudication on the same - it is clear that the duty of Rs.15,06,93,732/- paid by the appellant s Tuticorin unit which was passed on to the appellant s unit by issuing the supplementary invoice is not due to reason of suppression of fact, fraud, collusion or wilful mis-statement, etc. accordingly, the bar provided in Rule 57AE is not applicable in the facts of the present case. Therefore, the appellant is legally entitled for the cenvat credit on the supplementary invoices. Appeal allowed.
Issues:
- Whether the appellant is entitled to avail input credit on the supplementary invoices issued by their Tuticorin unit? - Whether the duty paid by the Tuticorin unit of the appellant was short paid or non-paid due to suppression of fact, fraud, collusion, or willful misstatement? - Whether the appellant is legally entitled to the Cenvat credit on the supplementary invoices? Analysis: Issue 1: Entitlement to Input Credit The case involved a dispute regarding the appellant's entitlement to avail input credit on supplementary invoices issued by their Tuticorin unit. The appellant contended that since there were no allegations of fraud or suppression against the Tuticorin unit, the credit should not be denied. The appellant cited various judgments to support their argument. However, the Revenue reiterated the findings of the impugned order, which held that the Tuticorin unit had suppressed facts to evade payment of duty. The Tribunal analyzed Rule 57AE of the Central Excise Rules, 1994, which allows denial of credit if duty becomes recoverable due to fraud, collusion, or suppression of facts. The Tribunal concluded that the duty paid by the Tuticorin unit was indeed short paid due to suppression of facts, making the denial of credit at the appellant's end justified. Issue 2: Short Payment of Duty The Tribunal examined whether the duty paid by the Tuticorin unit was short paid or non-paid due to suppression of facts, fraud, collusion, or willful misstatement. It was observed that the adjudicating authority of the Tuticorin unit had confirmed a demand for differential duty under Section 11A(2) of the Central Excise Act, 1944. The order did not invoke the proviso to Section 11A(1), indicating no charge of suppression of facts, fraud, or collusion. The duty paid by the Tuticorin unit, which was passed on to the appellant through supplementary invoices, was not due to suppression of facts. Therefore, the bar provided in Rule 57AE was deemed inapplicable, and the appellant was held legally entitled to the Cenvat credit on the supplementary invoices. Conclusion Based on the detailed analysis of the case, the Tribunal set aside the impugned order and allowed the appeals of the appellant. The decision was made after considering the facts related to the duty payment by the Tuticorin unit and the absence of evidence supporting suppression of facts or fraud. The judgment was pronounced on 21.12.2022 by the Appellate Tribunal CESTAT Ahmedabad, with detailed reasoning provided for each issue addressed in the case.
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