Job worker is eligible to avail Cenvat credit of differential duty paid under cover of supplementary invoice issued by principal manufacturer after finalization of provisional assessment
Jagatjit Industries Ltd. (the Appellant) was the job worker of Glaxo Smith Kline Consumer Health Care Ltd (Glaxo) and availed Cenvat credit of duty paid by Glaxo, the Principal manufacturer. The Appellant was clearing their final product manufactured on job work basis on payment of duty by utilizing Cenvat credit availed by them.
The assessments at the end of principal manufacturer were provisional and the same were subsequently finalized by a Final Assessment Order dated August 27, 2002, resulting in short payment of duty to the extent of Rs. 28,78,517/-. Accordingly, supplementary invoice for the said short payment was raised to the Appellant vide Invoice No. 4218 dated February 10, 2003. The Appellant availed Cenvat credit of the same. The Department disputed the availment of Cenvat credit on supplementary invoices by relying upon provisions of Rule 7(1)(b) of erstwhile Cenvat Credit Rules, 2002 (the erstwhile Credit Rules) [At present, Rule 9(1)(b) of the Cenvat Credit Rules, 2004] and further alleged that the duty paid under the cover of supplementary invoice cannot be co-related to the original invoices.
Both the Lower Authorities denied Cenvat credit availed on supplementary invoices and confirmed the demand of recovery of Cenvat credit wrongly availed along with interest and penalty. Being aggrieved, the Appellant filed an appeal before the Hon’ble CESTAT, Delhi.
The Hon’ble CESTAT, Delhi relied upon the judgment in the case of Hyundai Motors India Ltd. Vs. CCE [2008 (222) ELT 471 (Tri-Chennai)], and held that the provisions of Rule 7(1)(b) of erstwhile Credit Rules is not proper inasmuch as the said Rule debars availing Cenvat credit on the basis on supplementary invoices only where such additional duty became recoverable from the manufacturers on account of non-levy or short levy by reasons of fraud, collusion, or any willful misstatement or suppression of facts or contravention of any provisions with intent to evade payment of duty. In the instant case, since the Appellant took Cenvat credit of differential duty paid under the cover of supplementary invoice by principal manufacturer after finalization of provisional assessment, it is not a case of any suppressed production or malafide intent so as to invoke Rule 7(1)(b) of the erstwhile Credit Rules.
Hence, the Hon’ble Tribunal allowed Cenvat credit on supplementary invoice to the Appellant.