2020 (10) TMI 818 - AT - Central Excise

Tribunal allows appeal, grants Cenvat credit on supplementary invoices. No intent to evade duty.

M/s Bharat Aluminium Co. Limited, G. Rajendran, Dinesh Mantri, Rajesh Mohata and M/s Vedanta Limited Versus Commissioner of Central Excise Raipur

M/s Bharat Aluminium Co. Limited, G. Rajendran, Dinesh Mantri, Rajesh Mohata and M/s Vedanta Limited Versus Commissioner of Central Excise Raipur - 2021 ... Issues Involved:1. Disallowance of Cenvat Credit on supplementary invoices.2. Allegations of undervaluation and suppression of facts.3. Applicability of Rule 9(1)(b) of Cenvat Credit Rules.4. Revenue neutrality and bona fide belief.5. Time-barred nature of the show cause notice.Detailed Analysis:1. Disallowance of Cenvat Credit on Supplementary Invoices:The appeals arose from a common impugned order disallowing Cenvat credit of Rs. 24,65,79,458 availed by M/s Bharat Aluminium Company Limited (Balco) on supplementary invoices raised by their job worker M/s Vedanta Aluminium Limited (VAL), along with penalties under Rule 15 of Cenvat Credit Rules and Rule 26 of Central Excise Rules, 2002. The primary issue was whether Balco could avail Cenvat credit on supplementary invoices issued by VAL for differential duty paid due to undervaluation.2. Allegations of Undervaluation and Suppression of Facts:The Department alleged that VAL undervalued the goods cleared to Balco under a job work arrangement, leading to suppression of assessable value and evasion of duty. VAL, upon realizing the error, raised a supplementary invoice for Rs. 24,65,79,458 and paid the differential duty. The Department issued a show cause notice to VAL, which was later settled by the Settlement Commission, imposing penalties and interest.3. Applicability of Rule 9(1)(b) of Cenvat Credit Rules:The Department contended that Rule 9(1)(b) of the Cenvat Credit Rules barred Balco from availing credit on supplementary invoices where duty was paid due to suppression, fraud, or willful misstatement. However, the Tribunal found that Rule 9(1)(b) applies only to sales transactions, not job work arrangements. The transaction between Balco and VAL was a job work arrangement, not a sale, and thus Rule 9(1)(b) was not applicable.4. Revenue Neutrality and Bona Fide Belief:The Tribunal noted that the situation was revenue neutral as the duty paid by VAL was available as Cenvat credit to Balco. The method of valuation adopted by VAL was based on a business-like formula linked to the London Metal Exchange (LME) price, and later on the spot tender price of NALCO. The Tribunal found no evidence of fraud, suppression, or intent to evade duty, and held that the issue was interpretational in nature. The reliance on the Settlement Commission's order against VAL to deny credit to Balco was deemed erroneous.5. Time-Barred Nature of the Show Cause Notice:The show cause notice issued to Balco on 06.05.2013 was found to be time-barred. Balco had informed the Department about the transaction and availed credit in December 2009, and the Department was aware of the transaction by October 2010. The delay in issuing the show cause notice was attributed to the Department, and there was no evidence of suppression or intent to evade duty by Balco.Conclusion:The Tribunal allowed the appeals, set aside the impugned order, and held that Balco was entitled to avail Cenvat credit on the supplementary invoices issued by VAL. The extended period of limitation was not applicable, and there was no suppression of facts or intent to evade duty. The Tribunal emphasized the revenue-neutral nature of the transaction and the bona fide belief of the appellants.