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CX - Supplementary invoices issued in respect of Input services - prior to 1.4.2011 credit cannot be denied by borrowing restriction provided in un-amended Rule 9(1) of CCR, 2004: CESTAT

By TIOL News Service

MUMBAI, MAY 26, 2016: THIS is a Revenue appeal.

The issue involved in the present case is whether the respondent is entitled to avail CENVAT Credit in respect of supplementary invoice issued by the service provider for payment of service tax for the past period.

The adjudicating authority denied the CENVAT Credit on the ground that as per Rule 9(1)(b) of CCR, 2004, credit on supplementary invoice cannot be allowed when the payment of service tax is not made due to the reason of suppression of facts, fraud, collusion, willful mis-statement etc.

The Commissioner (Appeals) allowed the CENVAT Credit on the ground that the restriction provided under Rule 9(1)(b) of CCR, 2004 was not applicable, at the material time, in respect of service tax paid whereas the same was applicable to inputs and capital goods.

The AR while justifying the denial of credit submitted that since the credit was availed on Supplementary invoice, embargo contained in Rule 9(1)(b) shall apply mutatis mutandis in respect of service tax also.

The respondent submitted that the period involved in the present case is July 2005 to January 2009 and during that period Rule 9(1)(b) of CCR, 2004 restricted the CENVAT Credit in case of supplementary invoice only for the credit related to input or capital goods. Inasmuch as the restriction in respect of service tax,a specific amendment was made by insertion of Sub-clause (bb) in Rule 9(1) of CCR w.e.f. 1.4.2011 [Notfn. 13/2011-CE(NT) refers]. The decisions in JSW Steel Ltd. - 2008-TIOL-2351-CESTAT-MAD & Delphi Automotive Systems (P) Limited - 2013-TIOL-1793-CESTAT-DEL were also relied upon in support.

The Bench observed -

"5. …I find that during the relevant period of this case, Rule 9(1)(b) of CENVAT Credit Rules, 2004, does not put any restriction for availing the CENVAT Credit on the supplementary invoice in respect of input services received by the assessee. Admittedly, the restriction was brought by insertion of Sub-clause (bb) of Rule 9(1) of CENVAT Credit Rules w.e.f. 1.4.2011. Therefore prior to 1.4.2011 the credit cannot be denied borrowing the restriction provided in unamended Rule 9(1). This proposition has been endorsed by the various Tribunal decision as cited…"

Holding that there is no infirmity in the impugned order, the same was upheld and Revenue's appeal was dismissed.

(See 2016-TIOL-1247-CESTAT-MUM)


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