Bar of CENVAT Credit on supplementary invoice under Rule 9(1)(b) of the CENVAT Credit Rules is not applicable for input services – CESTAT
By TIOL News Service
CHENNAI, DEC 22, 2008: RULE 9 (1)(b) of the CENVAT Credit rules 2004 reads:
Documents and accounts. - (1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :-
(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 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.
The dispute before the Tribunal was whether the above provision is applicable for credit taken on input services. While denying the credit, the Commissioner held that:
The explanation clause clearly indicates that he ‘supplementary invoice' also includes invoice, bill or challan issued by a provider of input service or challan evidencing payment by the person liable to pay service tax. Hence all the provisions stated in the rule regarding supplementary invoice is not only applicable to inputs and capital goods but also to input services. It is a well settled principle that Explanation has to be read in consonance with the main part of the statute …….”
The explanation under Rule 9(1)(b) along with other sub-rules reads:
Explanation. - For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or
(c) a bill of entry; or
(d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or
(e) a challan evidencing payment of service tax by the person liable to pay service tax under [sub-clauses (iii), (iv), (v) and (vii)] of clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994; or
(f) an invoice, a bill or challan issued by 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.
The Tribunal found that the invoices issued to the appellants by the input service provider did not attract clause (b) of sub-rule (1) of Rule 9. This clause, in fact, did not apply to service tax at all. The Explanation to this clause was also therefore not applicable to the invoices issued by the input service provider. Documents for availment of credit of service tax paid on input services were those referred to under clauses (e), (f) and (g) of sub-rule (1) of Rule 9. The Explanation ibid was not applicable to any of these provisions.
(See 2008-TIOL-2351-CESTAT-MAD in 'Excise')