Cenvat Credit through Debi Note

[Guest]

Dear Sir,

Please advise us if our supplier raised Debit note to us and he charges the excise duty of this Debit noe.

Can we take of excise through the Debit Note ?

[Rajagopalan Ranganathan]

Sir,

Debit notes is not one of the documents mentioned under rule 9 of CENVAT Credit Rules, 2004 on the basis of which credit can be availed. Therefore the department will not accept debit note as valid document for taking cenvat credit. However there are some CESTAT decisions which allow the credit on the basis of debit note if it contains all the details which an invoice will contain. If you take the credit you can get relief only at the level of CESTAT only. This is my opinion.

[Mahir S]

In case the debit note issued by the manufacturer is containing the all particulars of Invoice, you may be allowed to take credit.

[Mahir S]

2015 (8) TMI 393 - CESTAT AHMEDABAD

Commissioner, Central Excise & Service Tax, Daman Versus M/s Nav Bharat Metallic Oxide Industries P. Ltd.

Denial of CENVAT Credit - Credit availed on invalid documents - Whether Respondent has taken CENVAT Credit on the basis of valid documents under Rule 9 of CCR and Rule 4A of the Service Tax Rules - Held that:- Debit note could also belong to the category of Invoice where all the prescribed details are available. As per World Book Dictionary also, an invoice means a list of goods sent to a purchaser often showing such other information as price, amounts etc. Similarly, a Bill means a statement of money owned for work done or things supplied. Accordingly, a debit note having all the prescribed details could be an invoice or bill. It is not brought out by Revenue as to what are the standard elements of an Invoice or Bill or Challan which are lacking in the debit notes issued to Respondent s Head Office. - Respondent has taken credit on the basis of ISD invoices issued by Respondents HQ and not on the basis of debit notes of the Sales Commission agents. As ISD invoices on the basis of which credit was taken are the prescribed documents, therefore, credit was correctly taken by the Respondent. Accordingly, there is no reason to interfere with the orders passed by the First Appellate Authority. - Decided against Revenue.

[KASTURI SETHI]

I agree with both the replies. Normally there is practice to allow the credit on the basis of debit notes subject to the conditions mentioned by both Sh.Rajagoplan Ranganathan and Sh.Mahir S. I further add that 'Debit Note' is one of the modes of payment mentioned in the definition/ term, 'Gross Amount Charged' under Section 67 (c) of the Finance Act.Moreover, during my service I have seen that even A.G.Audit also accepts this.

[Ganeshan Kalyani]

With due respect to the views submitted by learned experts i would like to share a practical experience that when depend on case law the credit has been availed and the department objects such credit then the litigation cost becomes more burden than the credit been taken. Therefore, if the credit amount is substantial then case laws should be depend upon otherwise not. this is what is opine.

AI Summary

Debit Notes Not Recognized for CENVAT Credit Claims Under Rule 9, But Exceptions Exist with Complete Invoice Details A query was raised regarding the eligibility to claim CENVAT credit through a debit note when excise duty is charged. Respondents clarified that under Rule 9 of the CENVAT Credit Rules, 2004, debit notes are not recognized for credit claims. However, if a debit note contains all necessary invoice details, some CESTAT decisions have allowed credit. It was noted that relying on case law for such claims can lead to costly litigation if disputed by the department. The consensus was that credit might be permissible if the debit note meets invoice requirements, but caution is advised due to potential legal challenges.