CESTAT quashes Demand of Excise duty in cash denying use of Cenvat Credit for Payment of Duty of Supplementary Invoices [Read Order]

The Banglore Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT)  quashes Demand of Excise duty in cash denying the use of Cenvat credit for payment of duty of supplementary invoices.

The appellant, M/s Traco Cable Company Ltd. manufactures electric cables/ACSR conductors and supplies to M/s Kerala State Electricity Board (KSEB) as per the contract which includes a price variation clause. The appellant paid duties at the time of removal of the goods. Subsequently, prices were enhanced retrospectively in view of the increase in the cost of raw materials. The differential duty in respect of such goods which were already cleared was paid by issuing supplementary invoices using Cenvat credit.

A show-cause notice dated 18.01.2008 was issued to the appellant alleging that the supplementary invoices were raised

and, therefore, they are relatable to the clearances already made during the previous months. As per the proviso to Rule 3 (4) of Cenvat Credit Rules, 2004 and proviso to Rule 3 (3) of Cenvat Credit Rules, 2002, the appellant could not have used Cenvat credit, which was taken after the last day of the month for payment of duty relating to that month. Therefore, the assessee/ appellant was called upon to pay the differential central excise duty on the supplementary invoices in cash and not using Cenvat credit. It was also proposed to demand, interest at the appropriate rate under Section 11AB of the Central Excise Act, 1944 for late payment of excise duty. It was also proposed to impose a penalty upon the appellant under Rule 15 of Cenvat Credit Rules, 2004/Rule 25 of Central Excise Rules, 2002 and Section 11AC of the Central Excise Act, 1944.

The coram of President Justice Dilip Kumar Gupta and Technical Member, P.V.Subba Rao held that the demand of duty in cash denying the use of Cenvat credit for payment of duty of supplementary invoices is set aside.

“Interest, if any, is payable under Section 11AB the same needs to be paid for the period from the date of clearance upto the date of payment of the differential duty. (c) the penalty imposed under Rule 25 of the Central Excise Rules, 2002 is set aside,” the CESTAT ruled.

To Read the full text of the Order CLICK HERE

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