By TIOL News Service

NEW DELHI, JAN 04, 2015: THE appellant was a job worker for M/s Glaxo Smith Kline Consumer Health Care Ltd. and was availing the benefit of credit of duty paid by M/s GlaxoSmithkline Consumer Healthcare Ltd., the Principal manufacturer. The appellant was clearing their final products, manufactured on job work basis on payment of duty, by utilizing the credit so availed by them.

The assessments at the end of principal manufacturer were provisional. The same were finalized subsequently, resulting in short payment of duty to the extent of Rs.28,78,517/- by the principal manufacturer. The said duty was paid by M/s GlaxoSmithkline Consumer Healthcare Ltd. under supplementary invoice dated 10.02.2003 and was availed as credit by the appellant.

As per the Revenue, the principal manufacturer did not voluntarily pay the duty but only after finalization of the provisional assessment and, therefore, credit is not admissible in view of rule 7(1)(b) of CCR. So also, it is alleged that the duty paid under the cover of supplementary invoices cannot be co-related to the original invoices.

The lower authorities denied the credit and the matter came to the Tribunal in the year 2005.

The Bench observed -

++ We find that the authorities reliance on the provisions of Rule 7(1)(b) of erstwhile CENVAT Credit Rules is not proper inasmuch as the said Rule debars availing the CENVAT credit on the basis on supplementary invoices, where such additional duty became recoverable from the manufacturers on account of non-levy or short levy by reasons of fraud, collusion, or any willful misstatement or suppression of facts or contravention of any provisions with intent to evade payment of duty. As such, it is clear that said Rule would be invokable only in case of malafide on the part of principal manufacturer.

++ In the present case, admittedly the assessment at the end of principal manufacturer was provisional and was finalized by a final assessment order dated 27.8.2002. It is on account of finalization of the provisional assessment that the shortfall to the extent of Rs.28.78 lakhs approximately was arrived at, which the principal manufacturer paid vide supplementary invoice dated 10.2.03. As such, we agree that this is not a case of any suppressed production or malafide intent so as to invoke Rule 7(1)(b).

++ We also note that principal manufacturer has given a certificate to the extent that supplementary invoices raised on 10.2.03 relates to invoices mentioned in the list of original invoices, and enclosed as annexure A, there is no rebuttal to the said certificate.

Holding that there are no justifiable reasons to uphold the impugned orders of the lower authorities, the same were set aside and the appeal was allowed with consequential relief.

(See 2015-TIOL-28-CESTAT-DEL)