Incomplete Debit Notes not Valid Document for availing Cenvat Credit under Rule 9 of CCR: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that Incomplete debit note not valid document for availing cenvat credit under Rule 9 of Cenvat Credit Rules (CCR), 2004.

The appellant, M/s. Bbazaar Marketing and Advisory Services Pvt Ltd filed a refund claim for the refund. The CENVAT Credit availed was based on the debit note raised by M/s. A&A Dukaan Financial Services (other party) and that the debit note was consequent to a subsequent agreement entered into by the appellant with the other party.

The Assistant Commissioner issued Show Cause Notice on the ground that the said debit note was not a valid document as per Rule 9 of the CENVAT Credit Rules, 2004 and consequently, the CENVAT Credit availed was ineligible credit in terms of Rule 9 of CCR. In the Show Cause Notice, it was proposed that a sum amounting to ten lakhs could not be taken into account and therefore, the refund claim was rejected.

The Counsel for the appellant submitted that the debit note was subsequently ratified by an agreement between the Appellant and the other party and the agreement purports to take effect retrospectively.

The Counsel for the Revenue submitted that there was violation of Rule 9 since the document relied upon was not any of the documents specified under Rule 9 of the CCR, 2004 and therefore, the credit sought to be availed would become ineligible credit, the refund of which was rightly rejected. The Counsel also referred to the contents of the debit note which reflects only the reimbursement of expenses incurred on behalf of the appellant and nothing about the provision of any service and that therefore, the same stands hit by the proviso to Rule 9(2) of CCR.

A Bench consisting of P Dinesha, Judicial Member held that “A Perusal of the debit note reveals that it does not contain the nature of taxable service per se provided by the other party to the appellant, which is the condition precedent in terms of the proviso to Rule 9(2) of CCR. Hence, I am of the view that in the present scenario, the debit note, which is incomplete, cannot be considered as a document specified in Rule 9 of CCR.”

Rahul Jain, Learned Chartered Accountant and Shwetha Vasudevan, Advocate, appeared for the appellant and Sridevi Taritla, Additional Commissioner, appeared for the Revenue.

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