Supplementary invoice credit under Cenvat rules: fraud-based short-levy exception applied at the prima facie stage.

Rule 9(1)(b) of the Cenvat Credit Rules, 2002 was treated as applicable to supplementary invoices issued by an importer, and the exception was read to cover additional duty recoverable from the importer for non-levy or short-levy caused by fraud, collusion, wilful misstatement, suppression of facts, or contravention of the excise or customs law with intent to evade duty. On the facts noted, proceedings had been initiated for short-levy on such grounds, so the plea that the exception did not apply was not accepted at the prima facie stage. The appellant was required to make a pre-deposit, with waiver of the balance and stay of recovery pending appeal.

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Issues: Whether credit taken on the basis of supplementary invoices issued by the importer was hit by the exception in Rule 9(1)(b) of the Cenvat Credit Rules, 2002 and whether the appellant should be directed to make a pre-deposit with waiver of the balance amount.

Analysis: Rule 9(1)(b) was held applicable to supplementary invoices issued by an importer. The exception in that rule covers cases where the additional amount of duty became recoverable from the importer on account of non-levy or short-levy by reason of fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Excise Act, the Customs Act, 1962, or the rules made thereunder with intent to evade duty. On the facts noted, proceedings had been initiated against the supplier for recovery on account of short-levy by reason of fraud and related grounds, and the submission that the exception was inapplicable was not accepted at the prima facie stage.

Conclusion: The appellant was directed to deposit Rs. 6,00,000 within six weeks, with waiver of the balance pre-deposit and stay of recovery of the remaining amount till disposal of the appeal.

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