Cenvat credit on supplementary invoices allowed where differential duty was voluntarily paid and no fraud or suppression was shown.

Cenvat credit on supplementary invoices issued by a job worker could not be denied where the differential duty was paid voluntarily after the short levy was pointed out. The article notes that the earlier payment had been made only on value addition and not on the full assessable value including raw materials; on these facts, the short levy was not shown to arise from fraud, collusion, wilful misstatement, suppression of facts or intent to evade duty. Rule 7(1)(b) of the Cenvat Credit Rules, 2002 therefore did not bar credit, and denial of Cenvat credit was unsustainable.

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Issues: Whether Cenvat credit could be denied on supplementary invoices issued by a job worker on the ground that the differential duty was paid after an offence case and, for that reason, Rule 7(1)(b) of the Cenvat Credit Rules, 2002 barred availment of credit.

Analysis: The supplementary invoices represented differential duty paid by the job worker. The differential liability arose because duty had initially been paid only on value addition and not on the full assessable value including raw materials. Once this was pointed out, the job worker paid the differential duty voluntarily. On these facts, the short levy was not shown to have arisen by reason of fraud, collusion, wilful misstatement, suppression of facts or intent to evade duty. The bar under Rule 7(1)(b) therefore did not apply. Support was also drawn from the principle that duty cannot be demanded on inputs not subjected to Modvat credit merely because they formed part of job-work manufacturing.

Conclusion: Denial of Cenvat credit was unsustainable and the assessee was entitled to succeed.

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