Supplementary invoices and CENVAT credit: dealer-issued invoices were not valid duty documents, while penalty was unauthorised.

Supplementary invoices issued by a registered dealer were not accepted as valid documents for availing CENVAT credit unless the additional duty was payable in the manner contemplated by Rule 7(1)(b) of the Cenvat Credit Rules, 2002; the credit was therefore inadmissible. Rule 13 of the same Rules was not read as authorising penalty on a registered dealer merely for issuing supplementary invoices to a purchaser, so the penalty was unsustainable. The result was that the credit claim failed, while the penalty was set aside.

---

---

Issues: (i) Whether CENVAT credit of additional excise duty could be taken on supplementary invoices issued by a registered dealer in the circumstances of the case; and (ii) whether penalty could be imposed on the registered dealer under Rule 13 of the Cenvat Credit Rules, 2002 for issuing such supplementary invoices.

Issue (i): Whether CENVAT credit of additional excise duty could be taken on supplementary invoices issued by a registered dealer in the circumstances of the case.

Analysis: Rule 7(1)(b) of the Cenvat Credit Rules, 2002 treated supplementary invoices as a permissible document for availing credit only where the additional duty had become payable in the manner contemplated by the rule. The credit claimed here was based on supplementary invoices issued by a dealer, while the invoices did not show that the manufacturer or importer had issued the duty-paying document in the required manner. The supplementary invoices were therefore not treated as valid documents for taking credit.

Conclusion: The credit was held to be inadmissible, against the assessee.

Issue (ii): Whether penalty could be imposed on the registered dealer under Rule 13 of the Cenvat Credit Rules, 2002 for issuing such supplementary invoices.

Analysis: Rule 13 of the Cenvat Credit Rules, 2002 was held not to contemplate penalty on a registered dealer merely for issuing supplementary invoices to the purchaser of goods. On that basis, the penalty imposed on the dealer was unsustainable.

Conclusion: The penalty was set aside, in favour of the assessee.

Final Conclusion: The credit claim of the main appellant failed, but the penalty on the registered dealer was annulled, resulting in a partial success for the appellants.

Ratio Decidendi: Supplementary invoices issued by a dealer, which do not constitute the manufacturer's or importer's valid duty-paying document as contemplated by the Cenvat Credit Rules, 2002, cannot sustain CENVAT credit; and penalty cannot be imposed on a registered dealer under Rule 13 where the rule does not authorize such penalty.

---