Relief to Vedanta Limited: CESTAT grants Cenvat Credit on Supplementary Invoices [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench granted Cenvat credit on supplementary invoices, thereby granting relief to Vedanta Limited.

In pursuance to an intelligence that M/s. Sterlite Industries (India) Ltd., Tuticorin has raised supplementary invoices in favour of Appellant i.e. M/s Sterlite, Silvasa (Now known as M/s Vedanta Ltd.) for differential duty paid by them on account of short payment of Central Excise Duty on clearance of ‘Copper Anode’ after issuance of show cause notice for undervaluation of ‘Copper Anode’ and suppression of actual cost of production.

On scrutiny of the invoices produced by the assessee, it was observed by the department that during April, 2001, M/s Sterlite, Silvasa has availed Cenvat Credit amounting to Rs. 15 crores on the strength of supplementary Invoices issued by M/s. Sterlite, Tuticorin. It was also observed that for short payment of duty proceedings were initiated against the M/s Sterlite, Tuticorin by issuing periodical show cause notices proposing demand of Central Excise Duty

. The said show cause notices were adjudicated and the demand was confirmed under Section 11A(2) of the Act. After the issuance of SCNs and few days before the adjudication order, M/s Sterlite, Tuticorin paid the amount of duty and issued supplementary invoices in favour of the appellant’s unit M/s Sterlite, Silvasa unit (Appellant) who in turn took credit of the duty in their cenvat credit account.

The appellant was issued show cause notice for denial of cenvat credit on the ground that the in terms of Rule 57AE of Central Excise Rules, 1944. The adjudicating authority confirmed the cenvat demand, interest and imposed penalty.

The Counsel for the appellant submitted that credit availed by the appellant on the supplementary invoices issued by the Tuticorin units is totally correct and is not hit by the exclusion provided in Rule 57AE(1)(ii) of the erstwhile Central Excise Rules, 1944.

That inasmuch as there is no allegation of any fraud, collusion, willful suppression etc., on the part of the Tuticorin unit with any intent to evade payment of duty in any of the 9 show cause notices issued to the Tuticorin unit, covering the period May 1997 to June 200, in respect of which the Tuticorin unit had paid differential duty, the impugned order denying credit availed by the appellant of such differential duty is, therefore, totally untenable.

A Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is clear that the duty of Rs.15 crores paid by the appellant’s Tuticorin unit which was passed on to the appellant’s unit by issuing the supplementary invoice is not due to reason of suppression of fact, fraud, collusion or wilful mis-statement, etc. accordingly, the bar provided in Rule 57AE is not applicable in the facts of the present case. Therefore, the appellant is legally entitled for the cenvat credit on the supplementary invoices.”

To Read the full text of the Order CLICK HERE

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