2018 (8) TMI 234 - AT - Central Excise

Tribunal grants appeal on Cenvat Credit admissibility based on manufacturer invoices

The Tribunal allowed the appeal, ruling in favor of the appellants regarding the admissibility of Cenvat Credit based on supplementary invoices issued by ... CENVAT Credit - duty paying invoices - credit availed on the basis of supplementary invoices issued by M/s. SECL - suppression of facts or not? - Rule 9 (1) (b) OF Cenvat Credit Rules - Held that:- No doubt, it is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon’ble Apex Court. It is clear to hold that the issue of wrong availment on part of M/s.SECL is still a debatable issue. In such circumstances, the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant. Issues:1. Admissibility of Cenvat Credit based on supplementary invoices.2. Interpretation of Rule 9 (1) (b) of Cenvat Credit Rules.3. Effect of pending adjudication against the main manufacturer.4. Allegations of suppression or collusion by the appellant.5. Presumption regarding government undertakings.Analysis:1. The case involved the admissibility of Cenvat Credit by the appellants based on supplementary invoices issued by the main manufacturer, South Eastern Coal Fields. The Department denied the credit under Rule 9 (1) (b) of Cenvat Credit Rules, leading to a show cause notice for recovery. The Original Adjudicating Authority and the Commissioner (Appeals) confirmed the denial, prompting the present appeal.2. The appellant argued that the main issue of valuation was pending before the Supreme Court, and similar matters had been decided in their favor previously. On the other hand, the Department contended that the appellant should have ascertained any misconduct or suppression by the main manufacturer. The Department highlighted that a show cause notice had been issued to the main manufacturer before the appellants availed the credit, indicating their failure to ascertain the situation.3. The Tribunal noted that both parties presented arguments on the entitlement of the appellants to avail Cenvat Credit based on supplementary invoices from Coal Companies. The Tribunal observed that the issue was sub-judiced due to pending adjudication against the main manufacturer. It differentiated between 'suppression' and 'confusion,' emphasizing that mere failure to ascertain did not equate to suppression or collusion. Additionally, the Tribunal considered the nature of the supplementary invoices issued by government undertakings.4. Referring to a previous Tribunal decision on a connected matter involving South Eastern Coal Fields Ltd., the Tribunal highlighted the absence of fraud or suppression by the appellant. The Tribunal emphasized the recurring nature of the issue and allowed the appeal, concluding that the appellant was entitled to take Cenvat Credit on the supplementary invoices in question.5. Despite the show cause notice issued to the main manufacturer before the appellant availed the credit, the Tribunal found the issue of wrong availment by the main manufacturer to be debatable, given the pending adjudication. Therefore, the Tribunal concluded that the appellant's actions did not amount to suppression. Based on these findings, the Tribunal accepted the appellant's arguments and allowed the appeal.