TMI Blog2023 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... is purely that of classification of the imported inputs. The appellant has paid the duty on the inputs under protest. It is brought out from the facts that the appellant has captively consumed the imported goods. The situation of issuing a supplementary invoice would arise only if the manufacturer sells the goods from his factory. In the present case, the appellant has captively consumed the goods. The credit has been availed of the duty paid on the TR-6 Challans - there is no reason to apply Rule 9(1)(b) of the CENVAT Credit Rules, 2004. The Tribunal Bangalore while analysing the similar issue in respect of the erstwhile Rule 7(1)(b) of the CENVAT Credit Rules, 2004 which is pari materia has held that the bar for availment of credit on supplementary invoices would operate only when the additional amount of duty becomes recoverable from the manufacturer on account of non-levy or short levy by reason of fraud, collusion or wilful mis-statement or suppression of facts, etc. Thus, the demand cannot sustain. The impugned order is set aside - appeal allowed. - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of CVD and SAD was not eligible in terms of provisions of Rule 9(1)(b) of the CENVAT Credit Rules, 2004. 1.2 Show Cause Notice dated 20.05.2019 was issued to the appellant alleging wrongful availment of credit and proposing to recover the same along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. On appeal, the Commissioner upheld the same. Hence, this appeal. 2.1 On behalf of the appellant, the Ld. counsel Shri M.S. Nagaraja appeared and argued for the appellant. It is submitted that the allegation in the Show Cause Notice is that the credit availed is ineligible as per Rule 9(1)(b) of the CENVAT Credit Rules, 2004 for the reason that a Show Cause Notice has been issued to the appellant by DRI alleging mis-classification of imported inputs. The Ld. counsel adverted to Rule 9(1)(b) of the CENVAT Credit Rules, 2004, and submitted that only when the additional amount of duty becomes 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 mis-statement or suppression of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (Tri.-Bang.)] to submit that the prohibition to avail credit on supplementary invoices will operate only in the case of sale. In other words the receiver of the input should have purchased the goods from the manufacturer who had to pay the additional amount of duty after detection of suppression of facts, fraud, etc., on his part. It was held in the said case that when there is simply a stock transfer the prohibition under Rule 7(1)(b) will not be applicable. Rule 7(1)(b) erstwhile CENVAT Credit Rules, 2004 was considered in the said decision. The decision of the Tribunal was upheld by the Hon ble High Court of Karnataka as reported in [2010 (258) ELT 62 (Kar.)]. 2.5 The Ld. counsel urged that since there is no allegation in the Show Cause Notice as well as no findings in the order passed by the adjudicating authority with regard to fraud, collusion, suppression of facts, the denial of credit is without any legal basis. It is prayed that the appeal may be allowed. 3. The Ld. Authorized Representative Shri M. Ambe appeared for the Department and supported the findings in the impugned order. It is submitted that the offence has been reported by the DRI and the Show Cause Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of 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 mis-statement or suppression of facts or contravention of any provisions of the Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wilful misstatement or suppression of facts or contravention of any provisions of the Act or of the Customs Act, 1962 or the rules made thereunder with intent to evade payment of duty. (emphasis supplied) A very careful reading of the above rules shows that the bar for availment of credit on supplementary invoices would operate only when the additional amount of duty becomes recoverable from the manufacturer on account of non-levy or short levy by reason of fraud, collusion or any wilful misstatement or suppression of facts etc. Further, the prohibition to avail credit on supplementary invoices will operate only in the case of sale. In other words the receiver of the input should have purchased the goods from the manufacturer who had to pay the additional amount of duty after detection of suppression of facts, fraud, etc., on his part. Therefore, when there is simply a stock transfer the prohibition under Rule 7(1)(b) will not be applicable. In other words, when there are two units A and B, and if goods are stock transferred from unit A to unit B and even if the additional amount of duty becomes recoverable from A on account of fraud, suppression of facts, etc., the unit B ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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