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The Commissioner of Central Excise Versus M/s. JSW Steels Ltd., The Customs, Excise and Service Tax Appellate Tribunal,

2017 (8) TMI 592 - MADRAS HIGH COURT

CENVAT credit - duty paying documents - Rule 9(1)(b) of the 2004 CCR - Whether the Tribunal was right in holding that the service tax credit taken by M/s.JSW Steel Ltd., Salem on the basis of supplementary invoices/bills/challans issued by the service provider? - Whether in view of the suppression, detection of evasion of service tax and registration of offence case against the respondent, the Tribunal was right in law to allow the availment of credit under CENVAT Credit Rules 2004? - Held that: .....

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es, would not be governed by the Explanation, as it is sought to be argued by the Revenue - the documents included in Clauses (e), (f) and (g) of Sub-Rule (1) of Rule 9 of 2004 CC Rules, would not be governed by the Explanation - the Assessee has correctly availed the CENVAT credit, based on the invoice / TR 6 challan - decided in favor of assessee. - Whether the violation of Rule 4A of Service Tax Rules, 1994 entitles the respondent to avail credit under CCR, 2004? - Held that: - A bare per .....

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date of provisioning of taxable service, an invoice, bill or challan. The details, which were to be provided in such an invoice, bill or challan, are also set out in the Rule - decided in favor of assessee. - Appeal dismissed - decided against Revenue. - Civil Miscellaneous Appeal Nos. 2498 & 3178 of 2010 - Dated:- 19-7-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appellant : Ms. Hema Muralikrishnan For the Respondent : Ms. Elizabeth Seshadri ORDER ( Judgment of the Court was deliv .....

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are adverted to by the Revenue as "ineligible documents". 3. The appeals in C.M.A.Nos.3178 of 2010 and 2498 of 2010 were admitted by this Court on 18.11.2010 and 03.12.2010 respectively, when the following questions of law were framed for consideration by this Court: "i) Whether the Tribunal was right in holding that the service tax credit taken by M/s.JSW Steel Ltd., Salem on the basis of supplementary invoices/bills/challans issued by the service provider ? ii) Whether in view o .....

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the assessee before the Tribunal: 4.1. The Assessee [formerly known as 'M/s.Southern Iron and Steel Company Ltd., (SISCOL)] was, at the relevant point of time, engaged in the manufacture of pig iron, steel bars and rods, flats etc. 4.2. The Assessee was providing manpower recruitment & supply services (input services) to an entity, known as M/s.Multicolour Projects (India) Ltd. 4.3. The services were provided at the Assessee's worksite, located at Pottaneri, Salem District, Tamil Na .....

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that the Assessee had availed of CENVAT credit when it conducted scrutiny of ER-1 monthly returns for the month of June, 2007. 5.1. Accordingly, a show cause notice dated 24.03.2008 (in short, 'the SCN'), was served on the Assessee. 5.2. By virtue of the said notice, the Assessee was called upon to show cause as to why wrong availment of CENVAT credit based on ineligible documents, amounting to ₹ 53,52,737/- ought not to be disallowed / recovered under Rule 14 of CENVAT Credit Rule .....

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The Assessee submitted a reply dated 22.05.2008. The Revenue not being impressed with the stand taken in the reply, after granting personal hearing in the matter, passed the Order-in-Original dated 28.05.2008. 6.1. Aggrieved by the same, the Assessee preferred an appeal with the Tribunal which was disposed of by the Tribunal via the impugned, albeit, common judgment and order, to which, we have made a reference above. Facts pertaining to the second appeal preferred by the assessee before the Tri .....

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Rules. 7.2. The CENVAT credit taken by the Assessee amounted to ₹ 67,62,355/- (inclusive of Educational Cess equivalent to ₹ 1,32,595/-). 7.3. Like in the other case, the Assessee was issued a Show Cause Notice, which incidentally is also dated 24.03.2008. The Assessee filed a reply dated 22.05.2008, qua the same. 7.4. The Revenue, after granting personal hearing, passed an Order-in-Original dated 28.05.2008, whereby, demand in the sum of ₹ 67,62,355/- vis-a-vis wrong availmen .....

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ules, 2002 read with Section 11AC of the 1994 Act. 7.8. A further penalty of ₹ 5,000/- was imposed on the Assessee under Rule 27 of Central Excise Rules, 2002. 7.9. Aggrieved by the same, the Assessee preferred an appeal to the Tribunal. The Tribunal disposed of the appeal along with the other appeal vide the impugned judgment. 8. It is, in this factual background, the instant appeals have been placed before us for adjudication. 9. On behalf of the Revenue, submissions were advanced by Ms. .....

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Assessee avail of CENVAT credit, based on ineligible documents, but that it was done after offence cases were registered by the Department for infraction of the provision of the law. 11.1. In this connection, the Revenue sought to highlight that, in the matter involving receipt of manpower and recruitment services by the Assessee from Multicolour Projects (India) Ltd., credit was taken after an offence case was registered against the said service provider by the Department, whereas, in respect o .....

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9(1)(b) were misconceived. Learned counsel contended that Rule 9(1)(b) was applicable in a situation where supplementary invoice (based on which credit was taken), was issued by the manufacturer or importer of inputs or capital goods, and that, it had nothing to do with the provider of input services. 12.1. Furthermore, it was submitted that the exception carved out in Rule 9(1)(b) of the 2004 CC Rules pertained only to additional duty, which become recoverable from a manufacturer or importer o .....

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nt of fraud, collusion or any wilful misstatement, etc., 12.3. Learned counsel also submitted that the explanation which was appended to Rule 9(1)(b) of the 2004 CC Rules did not apply to the remaining Clauses of Rule 9(1), which included Clauses (e), (f) and (g). 13. As alluded to above, the main issue centres around the interpretation which is to be accorded to Rule 9(1)(b) of 2004 CC Rules and the Explanation appended thereto. 13.1. Therefore, for the sake of convenience, the said Rule is ext .....

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ld by or on behalf of the said manufacturer; (II) inputs or capital goods as such; (ii) an importer; (iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002; (iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or (b) a supplementary invoice, issued by .....

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duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty. Explanation.-For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar doc .....

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a provider of input service on or after the 10th day of, September, 2004; or (g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994. Provided that the credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty .....

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ond stage dealer, as the case may be, in terms of the provisions of the Central Excise Rules, 2002 (In short 'the 2002 Rules'). 13.3. The invoices issued by a manufacturer for clearance of inputs or capital goods from his factory or depot or from the premises of his consignment agent or from any other premises from where the goods are sold, by or on his behalf, also qualify for availment of CENVAT credit. 13.4. This facility, under the Rule, it is made clear, extends to an invoice issued .....

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hatsoever, to input service provider. The Explanation which is appended to Clause (b) of Rule 9(1), clarifies what a supplementary invoice would include. The clarification adverts to the fact that the supplementary invoice would include a challan or any other similar document evidencing the payment of additional duty, leviable under Section 3 of the Customs Tariff Act. Clause (c) which follows the Explanation appended to Clause (b) is prefixed with the word "or". As indicated above, Cl .....

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the Explanation appended to Clause (b) of Sub-Rule (1) of Rule 9 only seeks to clarify that supplementary invoice would also include a challan or any other similar document, which evidences payment of "additional amount of additional duty" leviable under Section 3 of the Customs Tariff Act, issued by a manufacturer, importer of inputs or capital goods. 13.8. Therefore, the documents included in Clauses (e), (f) and (g) of Sub-Rule (1) of Rule 9 of 2004 CC Rules, would not be governed b .....

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becomes payable on account of fraud, collusion or any wilful misstatement or suppression of facts, etc., will not be applicable to the Assessee. 15.1. The Tribunal via the impugned common judgment has come to the same conclusion. 15.2. Therefore, insofar as Question Nos.(i) and (ii) are concerned, they will have to be answered in favour of the Assessee and against the Revenue. 15.3. Insofar as Question No.(iii) is concerned, which pertains to the alleged violation of Rule 4A of the Service Tax R .....

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of the Tribunal and hence, strictly need not be answered. 15.5. Having said so, we notice that Rule 4A of the Service Tax Rules, 1994, inter alia, at the relevant time, required the provider of taxable service, to issue, not later than fourteen days from the date of provisioning of taxable service, an invoice, bill or challan. The details, which were to be provided in such an invoice, bill or challan, are also set out in the Rule. 15.6. A bare perusal of the Rule would show that the obligation, .....

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