Supplementary invoice credit remains available where no adjudicated recoverable service-tax demand exists against the service provider.

Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 restricts credit on supplementary invoices only where additional service tax has become recoverable from the service provider due to fraud, collusion, wilful misstatement, suppression of facts, or intentional contravention. Recoverability requires proceedings and confirmation of a service-tax demand. Voluntary payment of tax, interest and penalty after investigation, without a show-cause notice or adjudicated demand against the provider, does not meet that condition. As supplementary invoices are prescribed credit documents, Cenvat credit remains admissible in those circumstances.

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Issues: Whether Cenvat credit availed on supplementary invoices issued by service providers is barred under Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 where no show-cause notice or adjudicated recoverable service-tax demand against the service providers is established.

Analysis: Rule 9(1)(bb) restricts credit only where the additional service tax has become recoverable from the service provider because of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax. A recoverable demand requires initiation of proceedings and confirmation of the service-tax demand; voluntary payment of tax, interest and penalty following investigation, without evidence of a show-cause notice or adjudicated demand against the service provider, does not satisfy that requirement. Supplementary invoices are otherwise prescribed documents for availing Cenvat credit.

Conclusion: Cenvat credit on the supplementary invoices was admissible; Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 was inapplicable. The issue was decided in favour of the assessee.

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