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TMI Blog2004 (7) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... Venture, the appellants had also entered into a Pipeline Supply Agreement (known as PSA) with JPOCL for supplying a certain quantity of these gases to them. For supplying these gases, the appellants had agreed to ensure that there would be adequate supply of electricity to JPOCL. The cost of these gases was arrived at by JPOCL after taking into consideration the various costs of manufacture including the cost involved in setting up the facility for the Company. In terms of the PSA, the price of the gas was to be varied in the event of a variation in the cost of manufacture. In terms of Clause 8.3 of PSA, the price was dependent upon the project cost of the production facility of JPOCL. In terms of Clause 8.6, it was to be adjusted on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this differential amount. JPOCL raised debit advices on the appellants for these amounts, which were subsequently converted into supplementary invoices by JPOCL so as to pass on the excise duty credit to the appellants. On the strength of the supplementary invoices, the appellants availed CENVAT credit. The appellants took the CENVAT credit on all these invoices during the period from December 2000 to March, 2001. An offence case was registered against the appellants for alleged irregular availment of CENVAT credit on the basis of supplementary invoices issued by M/s. JPOCL, with an intention to evade payment of excise duty and accordingly a Show Cause Notice dated 18-12-2001 was issued to them proposing to deny credit of Rs. 1,89,89,436/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction Facility from a base of Rs. 144.94 crores, either upwards or downwards. For each Rs. 2.4 crores of variation, the base Gaseous Oxygen and Gaseous Nitrogen price will be correspondingly adjusted by Rs. 0.01/Nm3. This adjustment will be prorated for the actual amount of variation. Article 8.6 gives the formula for adjustment of the prices as under : New prices = Adjustment + Power Previous Prices + Inflation Adjustment + Currency Adjustment The details of each of them are given in the said para. It gives the method of determining Power Adjustment, Inflation Adjustment. Article 8.8 states that after the end of each tax year for eight (8) tax years beginning with the tax-year in which the First D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the order of the Commissioner is not correct on the ground that he has held that credit is Modvatable to them for those invoices, which were issued prior to 29-8-2000. He said that the finding of the Commissioner that the assessee have availed credit against supplementary invoices, which were issued prior to 29-9-2000, is not correct. He pleaded that even though the department has not filed any appeal against the order of the Commissioner nor any cross-objection have been filed by them on the demand made by the department for the period prior to 29-8-2000, he pleaded that it is not covered by cost escalation and at the relevant time Rule 57G(5) had provided a time-limit of six months for taking credit from the date of issue of invoices. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary invoices were not eligible documents to avail credit. This fact has not been denied by JVSL. However, I observe that the supplementary invoice was made an eligible document to avail credit vide Notification No. 51/2000-C.E. (N.T.), dated 29-8-2000 subject to the condition that an additional amount of excise duty has been paid on finalisation of provisional assessments or due to cost escalation as provided for in accordance with the normal commercial practice. I observe that JVSL have availed credit after 29-8-2000 when the said Notification was in force. I further observe that the said Notification nowhere lays a condition that credit cannot be availed against the supplementary invoices, which were issued prior to 29-8-2000… Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cility charges represent the cost overruns for the setting up of the plant. The cost of plant and any escalation thereof will certainly form a part of the cost of manufacture of gases. We also find that as per the Clause 8.8 of the PSA, the appellant was to reimburse JPOCL its income-tax liability, as that also formed part of the overall cost of manufacture and profitability of the gas. Therefore, the additional consideration, which was received by M/s. JPOCL from the appellants, was for cost escalation of the gases and they had paid that duty on the said cost escalation. Therefore, the appellants have correctly taken the credit on those supplementary invoices. 8. We, therefore, do not find any merit on the pleadings of the department and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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