In a significant case, the Allahabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an order denying credit in supplementary invoices evidencing payment of service tax for a period before amendments made in the Cenvat credit rule is not valid
M/s Hindalco Industries Ltd., the appellant is a manufacturer of excisable goods and is availing the CENVAT Credit as admissible to them in terms of CENVAT Credit Rules, 2004. The Appellant received services from various contractors for the provision and execution of various works such as maintenance and repair services, cleaning services, cargo handling services, recruitment agency services, and site formation services.
The service providers issued bills and subsequently supplementary bills in respect of the service provided. In some cases no service tax was charged on the original bill and in some case part service tax was charged. Subsequently service providers issue supplementary invoices/ bills and charged the uncharged portion of service tax from the appellants. Appellants paid the service tax, against the invoices/ bills and supplementary invoices/ bills.
The revenue viewed that the appellant could not have taken the credit of service tax charged on the supplementary invoices/ bills as these are not the prescribed documents for availment of CENVAT Credit. A show cause notice was issued to the appellant demanding excise duty along with appropriate interest under rule 14 of CENVAT Credit Rules, 2004 read with proviso to section 11A (1) & 11AB of the Central Excise Act, 1944.
Shri Atul Gupta & Shri Prakhar Shukla, advocates appeared for the appellant and Shri Manish Raj, Authorized Representative for the revenue.
A two-member bench comprising Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) viewed that “ In one case, the assessee could not claim CENVAT credit till such time it was served with an invoice, while in another case, it claimed credit only after it had paid service tax based on reverse charge. Going by these peculiar circumstances, arising in the instant case, we are of the view, that the delay involved cannot be categorised as an inordinate period of delay, as was sought to be conveyed by the Revenue, via its averments made in the appeal.”
Further observed that the impugned order denying the credit on the supplementary invoices evidencing the payment of service tax for the period before amendments made in the CENVAT Credit Rule, 2004 by way of insertion of Rule 9 (1) (bb) with effect from 01.04.2011 is not valid.
While allowing the appeal, the CESTAT set aside the order disallowing the CENVAT Credit and the order demanding the interest and for imposition of penalty.
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