Dispute over input credit entitlement based on supplementary invoice upheld under Cenvat Credit Rules

The case involved a dispute over the entitlement of the assessee to claim input credit based on a supplementary invoice issued by their unit. The lower appellate authority allowed the input credit, ruling that as there was no sale but a transfer of goods between units, the respondent could claim credit under Rule 9(1)(b) of the Cenvat Credit Rules, 2004. The Member (J) upheld this decision, finding no suppression of facts by the respondent, and referencing a Karnataka High Court decision. Consequently, the impugned order was affirmed, and the Revenue's appeal was dismissed.

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Issues involved: Whether the assessee is entitled to avail input credit on the basis of supplementary invoice issued by their unit.

Summary:
The case involved a dispute regarding the entitlement of the assessee to claim input credit based on a supplementary invoice issued by their unit. The facts revealed that goods were transferred from Unit no. 2 to Unit no. 1 on the basis of an invoice calculated as per CAS 4. Subsequently, when the actual cost of production was determined, the differential duty was paid and supplementary invoices were issued to Unit no. 1. The adjudicating authority initially denied the input credit claimed by the respondent, but the lower appellate authority allowed it citing no suppression of facts and relying on a judgment of the Hon'ble Karnataka High Court. The revenue appealed against this decision.

The lower appellate authority held that as there was no sale involved, but rather a transfer of goods between units, the respondent was entitled to claim input credit as per Rule 9(1)(b) of the Cenvat Credit Rules, 2004. The revenue contended that the impugned order should be set aside.

The respondent's counsel argued that the case was similar to a decision of the Karnataka High Court and therefore the impugned order should be upheld. After considering the submissions, the Member (J) found that the key question was whether the respondent could avail input credit on the supplementary invoice. Referring to the Karnataka High Court decision, it was established that in cases of suppression of facts, the assessee cannot claim input credit on supplementary invoices. Since there was no specific allegation of suppression against the respondent in this case, they were deemed entitled to avail input credit on the supplementary invoice. Consequently, the impugned order was upheld, and the Revenue's appeal was rejected.

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