Invoice Issued Beyond 14 days from Date of Completion of Service/Receipt of Payment: CESTAT sets aside Demand of Cenvat Credit [Read Order]

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the demand of Cenvat Credit on invoices issued beyond 14 days from the date of completion of service/receipt of payment.

M/s. Usha Martin Limited, the appellant challenged the Order-in-Original passed by the Commissioner, Central Excise & Service Tax, Jamshedpur, wherein the CENVAT Credit has been disallowed on supplementary invoices. Apart from the duty demand, an equivalent Penalty has been imposed. The period in dispute involved is August 2008 and September 2008.

The service provider, M/s Maa Engineering was not registered with the Department. It provided certain taxable services such as the erection, commissioning, and crushing of iron ores to the Appellant. Invoices were raised on the appellant without charging any service tax.

An investigation was carried on at the premises of the service provider under which, it got itself registered and raised supplementary tax invoices dated 06.08.2008 charging service tax on earlier invoices with cross-reference to the earlier invoices during the period when it was unregistered. The Appellant paid the service tax amount to the service provider and availed of Cenvat Credit.

The Commissioner disallowed the CENVAT credit on invoices on the ground that the said invoices have been raised by the service provider much later than 14 days from the date of the completion of service/ receipt of the amount in violation of Rule 4A(1) of the Service Tax Rules 1994 and Rule 9(2) of the CENVAT Credit Rules 2004.

A two-member bench comprising Shri P K  Choudhary, (judicial) and Shri K Anpazhakan,(technical)  observed that Rule 9(1)(f) of CCR 2004 specifies only ‘invoice’ and not ‘supplementary invoice’ on which CENVAT credit can be availed.

The Commissioner also imposed a penalty under Rule 15(3) read with Section 11AC of the Central Excise Act, 1944, on the ground that the credit has been availed with a willful intent to evade payment of excise duty on the manufactured goods on the removal from the factory in collusion with Noticee.

The Commissioner has observed that the 14-day time period prescribed in Rule 4A(1) is mandatory and non-compliance thereof would render the document void. Hence, the present appeal before this Tribunal.

It was held that cenvat credit cannot be disallowed in the hands of the service recipient by invoking Rule 4A (1) of the ST Rules even if the service provider issues such invoice beyond the prescribed period of 14 days from the date of completion of service/receipt of payment. The obligation to issue the invoice timely has been cast on the service provider and not the service recipient.

The CESTAT set aside the impugned order and the demand for recovery of CENVAT Credit, interest and penalty. The appeal was allowed.

To Read the full text of the Order CLICK HERE

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