Supplementary invoices and CENVAT credit remain admissible unless differential duty arose from fraud, suppression, or intent to evade duty.

CENVAT credit on differential duty paid through supplementary invoices remains available unless the additional duty arose from fraud, collusion, wilful misstatement, suppression of facts, or a similar contravention with intent to evade duty. Where the connected dispute establishes that no such suppression or intent to evade existed, the exclusion in Rule 7(1)(b) of the CENVAT Credit Rules, 2001 cannot be applied to deny credit to the recipient. On that basis, supplementary invoices for differential duty do not by themselves bar admissibility of credit, and the credit is admissible to the assessee.

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Issues: Whether CENVAT credit of differential duty paid on supplementary invoices was admissible when the supplier's earlier demand was held not to involve suppression or wilful misstatement with intent to evade duty.

Analysis: The credit was taken on supplementary invoices issued for differential duty paid by the job worker on exhaust systems manufactured using free-supplied inputs. The governing provision excluded supplementary invoices only where the additional duty became recoverable because of non-levy or short-levy by reason of fraud, collusion, wilful misstatement, suppression of facts, or similar contravention with intent to evade duty. In the connected dispute concerning the job worker, the Tribunal had already found that there was no suppression or misstatement with intent to evade duty. Once that finding stood, the exception to Rule 7(1)(b) could not be invoked to deny credit to the recipient.

Conclusion: The denial of CENVAT credit was unsustainable and the credit was admissible to the assessee.

Ratio Decidendi: A supplementary invoice is not hit by the exclusion in Rule 7(1)(b) of the CENVAT Credit Rules, 2001 unless the additional duty became recoverable because of fraud, collusion, wilful misstatement, suppression of facts, or equivalent contravention with intent to evade duty.

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