Denial Of Availment Of CENVAT Credit On Performa Invoices, Despite All Information, Is Absolutely Wrong: CESTAT

The appellant/assessee is in the business of manufacturing zinc concentrate, lead concentrate, etc. and is also engaged in providing and receiving goods transport agency service, legal consultancy service, manpower supply service, rent-a-cab service, etc. During the course of the audit of records, the department observed that the appellant had wrongly availed of Cenvat Credit.

The department has proposed to recover the Cenvat Credit amounting to Rs. 2,64,442 from the appellant along with the interest and proportionate penalty via show cause notice. The proposal was confirmed initially. The appeal of the appellant was rejected except that the amount of penalty was reduced to 25% of the demand in terms of the second proviso to section 78 of the Finance Act, 1994.

The appellant submitted that the Cenvat Credit has been denied on mere technical or procedural aspects, which is not permissible under law. There was no denial of duty or tax paid by the appellant. The credit cannot be denied based upon an allegation that the credit has been claimed based upon a proforma invoice. The invoices had all the details required under Rule 9 of the Cenvat Credit Rules. Hence, the adjudicating authority has wrongly denied the credit.

The departmental contended that each allegation of the Show Cause Notice has been meticulously dealt with by the Commissioner (Appeals), who has given a justified reason for rejecting the submissions of the appellants before confirming the demand against the appellant.

The tribunal observed that the manufacturer or producer of the final product or the provider of output service is eligible to take CENVAT Credit of the duty/ tax paid by him in terms of Rule 3 of Cenvat Credit Rules, 2004. Rule 9 requires certain documents and accounts to be the basis for taking the Cenvat Credit. Rule 9 of Cenvat Credit Rules, 2004 clarifies that Cenvat Credit on the documents as mentioned in Sub Rule (1) of Rule (9) shall be available if and only if all the particulars as prescribed under the respective statute are contained in the documents. The conjoint reading of both the Rules makes it clear that it is not merely a specific document in sub rule but any similar document which may provide all the statutory particulars that the same shall be admissible for permitting availment of Cenvat Credit to the manufacture or service provider.

"The documents required under the Rule 9 are not confined to merely invoices but these may be any documents, like billor challan as issued in terms of Rule 4 (2) A of the Service Tax Rules etc. This particular Rule specifies the amount of information as is required in a particular document for availment of Cenvat Credit. Thus any documents as required under Rule 4(2)A can be the documents under Rule 9 of Cenvat Credit Rules for entitlement of availing Cenvat Credit," the CESTAT said.

The tribunal held that entire information as required under Rule 9 of the Service Tax Rules was available in the performa invoices on which credit was availed by appellant. Hence, it is held that denial of availment of Cenvat Credit on performa invoices was absolutely wrong.

Case Title: Hindustan Zinc Ltd. Versus Commissioner Appeals

Citation: Excise Appeal No. 51720/2021

Dated: 25-04-2022

Counsel For Appellant: Advocate Hemant Bajaj

Counsel For Respondent: Authorised Representative for the Department Ishwar Charan

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