2024 (1) TMI 79 - AT - Central Excise

CENVAT Credit - credit availed based on supplementary invoices - valid documents to take Cenvat credit as per Rule 9(1) (b) of the Cenvat Credit Rules, 2004 or not - wilful mis-statement or suppression of facts or not. The logic in the SCN is that since the short paid duty was paid when the officers pointed out, it means the Silicon had not paid duty by reason of wilful mis-statement or suppression of facts or violation of the Act or Rules with an intent to evade. HELD THAT - Clearly, there can be no legal presumption of wilful misstatement or suppression of facts or violation of Act or Rules with an intent to evade if the assessee, on being pointed out by the officers, pays the differential duty. We fail to understand how the Additional Commissioner made such a presumption and further, based on that presumption, issued the SCN to deny Cenvat credit to the appellant. He also had no jurisdiction to decide if Silicon, which is an assessee of the Vishakapatnam Commissionerate, had willfully misstated or suppressed facts or violated Act or Rules with an intent to evade. His jurisdiction in Jaipur is thousands of miles away from Silicon and he erred in arrogating to himself the jurisdiction over the assessee in Vishakapatnam. Both the lower authorities have clearly erred in upholding the demand, interest and penalties proposed in the SCN. The impugned order is based on the presumption of wilful misstatement or suppression of facts and further, such presumption is regarding an assessee (Silicon) over which they had no jurisdiction at all. The impugned order is set aside with consequential relief to the appellant - Appeal allowed.

Summary

Issues involved:
- Denial of Cenvat credit based on supplementary invoices issued by a related party.
- Jurisdictional errors in determining wilful misstatement or suppression of facts.

Denial of Cenvat Credit:
The appellant, a pharmaceutical manufacturer registered with the Central Excise Department, availed Cenvat credit on inputs procured from a related party, M/s. Silicon Life Sciences. Silicon was advised by excise officers to value inputs at 110% of production cost based on CAS-4 certificates. Silicon calculated the differential value, paid excise duty, and issued supplementary invoices to the appellant, who availed Cenvat credit based on these invoices. A show cause notice was issued to deny the credit, alleging non-levy of duty due to wilful misstatement or suppression of facts. The appellant contested the denial, but it was confirmed by the authorities, citing Rule 9(1)(b) of the Cenvat Credit Rules, 2004. However, the Tribunal found no evidence of fraud or violation by the appellant, emphasizing that determining such issues falls under the jurisdiction of the excise authorities where the supplier is located, not where the appellant is registered. The impugned order denying the credit was set aside, granting relief to the appellant.

Jurisdictional Errors:
The Tribunal highlighted jurisdictional errors in the decision to deny Cenvat credit based on the presumption of wilful misstatement or suppression of facts. The Additional Commissioner, located far from the supplier's jurisdiction, lacked authority to determine violations by the supplier. The lower authorities erred in upholding the demand without proper jurisdictional assessment. The Tribunal emphasized that no legal presumption of fraud or violation can be made if the differential duty is paid upon notification by excise officers. The impugned order was deemed erroneous, and the appeal was allowed, setting it aside with relief to the appellant.