Custom, Excise & Service Tax Tribunal
M/S Delphi Automotive Systems (P) ... vs Cce, Noida on 25 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Excise Appeal No. 3273-3274 of 2010 (SM) [Arising out of the Order-in-Appeal No. 261-262/CE/Appl/Noida/ 2010 dated 20/08/2010 passed by The Commissioner (Appeals), Customs & Central Excise, Noida.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Delphi Automotive Systems (P) Limited Appellant Versus CCE, Noida Respondent
Appearance Ms. Nupur Maheshwari, Advocate for the appellant.
Shri Davender Singh, Authorized Representative (Jt. CDR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 25/09/2013.
Final Order No. 57806-57807/2013 Dated : 25/09/2013 Per. Rakesh Kumar :-
The appellant are manufacturers of automobile parts. They avail Cenvat credit of Central Excise duty paid on the inputs and capital goods and of service tax paid on input services. Since they are also exporting the goods manufactured by them and since in terms of the provisions of Cenvat Credit Rules, the Cenvat credit in respect of inputs and input services availed for manufacture of goods exported under bond/LUT is not required to be reversed, they had Cenvat credit got accumulated due to export of goods without payment of duty under bond/LUT and since they could not utilise that credit for payment of duty on clearances for home consumption, they claimed cash refund of accumulated Cenvat credit in terms of Rule 5 of the Cenvat Credit Rules, 2004 readwith Notification No. 5/2006-CE (NT) issued under this rule. The dispute in this case is in respect of the cash refunds for the months of June 2008 and August 2008. During these months, the appellant had availed service tax Cenvat credit in respect of manpower supply services received by them from certain service providers and the credit had been taken on the basis of supplementary invoices. The credit of Rs. 9,63,790/- was taken during June 2008 on the basis of supplementary invoices issued by the service providers and the credit of Rs. 3,94,070/- was taken on the basis of supplementary invoices of the service providers during August 2008. The service providers had paid this additional service tax under supplementary invoices on account of some dispute regarding the value of the taxable services which the Department had decided against them. The department was of the view that Cenvat credit on the basis of supplementary invoices is not admissible in view of the provisions of Rule 9 (1) (b) of the Cenvat Credit Rules according to which when the short payment duty paid on inputs/capital goods, paid under supplementary invoices, was due to wilful misstatement, suppression of facts etc. on the part of the supplier, the recipient of such inputs/capital goods would not be entitled to take Cenvat credit on the basis of such supplementary invoices. Accordingly, by two separate orders passed by Assistant Commissioner he rejected the cash refund of the above amounts of Rs. 9,63,790/- and Rs. 3,94,070/- on the ground that Cenvat credit of these amounts was not admissible. On appeals being filed against these orders to Commissioner (Appeals), the Commissioner (Appeals) by common order-in-appeal No. 261-262/CE/APPL/NOIDA/2010 dated 20/08/2010 upheld the Assistant Commissioners orders against which these two appeals have been filed.
2. Heard both the sides.
3. Ms. Nupur Maheshwari, Advocate, the learned Counsel for the appellant, pleaded that the dispute pertains to June 2008 and August 2008, that during that period in terms of the provisions of Rule 9 (1) (b) regarding availability of Cenvat credit on the basis of supplementary invoices issued by the supplier of inputs/capital goods, there was a condition that Cenvat credit on the basis of such supplementary invoices would not be available when the duty paid under the supplementary for inputs or capital goods was that which had been deliberately short paid by the supplier of inputs/capital goods by taking recourse to fraud, suppression of facts, wilful misstatement etc., that this condition was in respect of inputs and capital goods only and there was no such condition for availment of service tax Cenvat credit on the basis of supplementary invoices issued by a service provider, that so far as input service are concerned, Cenvat credit is available on the basis of invoices, bills or challans and the term invoice would also include supplementary invoice, that the Tribunal in the cases of EBG India Pvt. Ltd. vs. CCE, Nasik reported in 2009 (240) E.L.T. 317 (Tri. Mumbai), M/s LG Balakrishnan & Bros. Ltd. vs. CCE, Trichy reported in 2010 TIOL 949 CESTAT MAD, M/s JSW Steel Ltd. Salem Works vs. CCE, Salem reported in 2008 TIOL 2351 CESTAT MAD, Chaphekar Engg. Pvt. Ltd. vs. CCE, Pune I reported in 2013 TIOL 347 CESTAT MUM and Secure Meters Ltd. vs. CCE, Jaipur II reported in 2010 (18) S.T.R. 490 (Tri. Del.) has held that during period prior to 1/4/11, a supplementary invoice evidencing payment of additional amount of tax is not treatable as different from the original invoice, evidencing original payment of duty, as both the documents were issued under some provisions of law and that Cenvat credit of additional service tax paid under supplementary invoice cannot be denied, even if the short payment was on account of wilful suppression, misstatement etc. on the part of the service provider, that such a provision putting restriction on the availability of Cenvat credit of service tax paid under supplementary invoices was introduced by inserting clause (bb) to Rule 9 (1) w.e.f. 1/4/11, that this provision cannot be given retrospective effect and, that in view of this, the impugned order denying the Cenvat credit on the basis of supplementary invoices of the service providers and its cash refund is not correct.
4. Shri Davender Singh, the learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it and emphasised on the following points :-
(a) From the provisions of Rule 9 of the Cenvat Credit Rules, as the same existed during the period prior to 1/4/11 it is clear that the legislature made a distinction between the invoice and supplementary invoice and in respect of supplementary invoices, the Cenvat credit was disallowed when the additional tax paid under supplementary invoice was that which had been short paid due to fraud, wilful misstatement, suppression of fact etc. on the part of the supplier of the inputs or capital goods
(b) From the provisions of Rule 9 (1) (b), it is clear that the intention of the legislature from the very beginning was that Cenvat credit should not be allowed of the additional tax paid under supplementary of invoices issued by the supplier of inputs, capital goods or services where there was deliberate evasion of tax by that supplier. Therefore, even during period prior to 1/4/11, if there was deliberate of short payment of service tax by a service provider, the Cenvat credit of service tax paid under supplementary invoices would not be admissible to the service recipient who had used those services in the manufacture of excisable goods.
(c) Though clause (bb) containing provisions analogous to clause (b) of Rule 9 (1) in respect of service was introduced w.e.f. 1/4/11, in view of the legislative intent evident from the provisions of Rule 9 (1) (b), even during the period prior to 1/4/11, Cenvat credit of service tax paid by a service provider under supplementary invoice would not be admissible to service recipient who had used that same for manufacture of excisable goods or providing taxable output service, if the tax paid under the supplementary invoice was that which had been deliberately short paid by the service provider by taking recourse to fraud, wilful misstatement, suppression of facts etc.
5. I have considered the submissions from both the sides and perused the records.
6. The point of dispute in this case is is about availability of Cenvat credit of service tax paid by the service provider under supplementary invoices, as in respect of service providers there was dispute with regard to value of their services, which had subsequently had been decided against them by the Department. It appears that the service tax demand against the service providers had been confirmed by making allegation of fraud, suppression of facts etc. and on this ground only, the department invoking Rule 9 (1) (b) seeks to disallow the Cenvat credit to the appellant. The Cenvat credit is also sought to be denied on the ground that the supplementary invoice is not a proper document prescribed in Rule 9 (1) for taking credit of service tax.
7. In terms of Claude (e), (f) and (g) of Rule 9 (1) of Cenvat Credit Rules, Cenvat credit availed can be availed by a manufacturer or provider of output service on the basis of challans evidencing the payment of service tax by a person liable to pay the service tax or an invoice, bill or challan issued by the provider of input services or an invoice, bill or challan issued by input service distributor under Rule 4A of Service Tax Rules, 1994. During the period of dispute i.e. the period prior to 1/4/11, there was no mention of supplementary invoice in clause (e), (f) and (g) of Rule 9 (1) which prescribes the documents on the basis of which credit of service tax paid on input service can be taken and the mention of supplementary invoice was only in respect of supply of inputs and capital goods in clause (b) of Rule 9 (1) according to which a supplementary invoice issued by a manufacturer or importer of inputs or capital goods in terms of provisions of Central Excise Rules, 2002 from a factory or from depot or premises of the consignment agent of the said manufacturer or importer or from any other premises, from where the goods are sold, shall be the valid document for Cenvat credit except in the cases where the additional amount of tax paid under supplementary invoice was that which had become recoverable from the manufacturer or importer on account of any non-levy or short levy by the reason of fraud, collusion, misstatement or suppression of facts etc. on the part of the manufacture or importer. This provision was only in respect of supply of inputs and capital goods and, as such, in respect of supply of input services there was no such provision. Such a provision was introduced only w.e.f. 1/4/11 by inserting clause (bb) in Rule 9 (1). The point of dispute is as to whether during the period prior to 1/4/11, which is the period of dispute in this case, the Cenvat credit can be allowed of the additional amount of service tax paid by a service provider under supplementary invoices when the additional amount paid was that which had been short paid on account of deliberate evasion.
8. Coming to the first question as to whether during the period of dispute, supplementary invoice could be treated as a valid document, I find that a Division Bench of this Tribunal in the case of EBG India Pvt. Ltd. vs. CCE, Nasik (supra) has held that supplementary invoice evidencing payment of additional duty amount is not to be treated on a different footing vis-`-vis the original invoice evidencing original payment of duty as both these documents were issued under the same provisions of law. Moreover in the Service Tax Rules, 1994 there is provision only for issue of invoice by the service provider or input service distributor and, as such, the Service Tax Rules also do not mention the issue of supplementary invoices when additional service tax is required to be paid due to any reason. In view of this, the term invoice mentioned in Clause (f) and (g) of Rule 9 (1) of Cenvat Credit Rules, 2004 has to be treated including supplementary invoice, as during the period of dispute, with regard to service tax payment, the Rule 9 (1) did not make any distinction between invoice and supplementary invoice.
9. As regards the restriction that the Cenvat credit of the tax paid under supplementary invoice would not be admissible when the tax paid is additional service tax not paid or short paid due to deliberate evasion, this restriction during the period prior to 1/4/11 was only in respect of supply of inputs and capital goods as provided in clause (b) of Rule 9 (1) and such restriction in supply of services was introduced only w.e.f. 1/4/11 by inserting clause (bb) to Rule 9 (1). Since Rule 9 (1) (bb) does not has retrospective effect, the provisions of the same cannot be applied during the period prior to 1/4/11. I find that same view has been taken by the Division Bench in the cases of M/s JSW Steel Ltd. Salem Works vs. CCE, Salem reported in 2008 TIOL 2351 CESTAT MAD, Chaphekar Engg. Pvt. Ltd. vs. CCE, Pune I reported in 2013 TIOL 347 CESTAT MUM and Secure Meters Ltd. vs. CCE, Jaipur II reported in 2010 (18) S.T.R. 490 (Tri. Del.). Moreover, when a restriction on availment of Cenvat credit in respect of input services has been introduced from a particular date by inserting a provision and that provision is not retrospective, the same cannot be applied with retrospective effect. In view of this, the impugned order is not sustainable. The same is set aside. The appeals are allowed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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