Order Date: 16 September 2022

Facts-

• The Appellant, Hindalco Industries Limited, is engaged in the manufacture of excisable goods viz, aluminium foil and plates, etc. on which applicable Central Excise Duty is being paid. The Appellant supplied aluminium waste and scrap free of cost to the conversion agents on principal-to principal basis for conversion of said goods into aluminium ingot. 
• Proceedings were initiated by the Central Excise Department against the said conversion agents for which the agents accepted the enhancement of assessment by 4% as pointed out by the Central Excise Department. The conversion agent raised supplementary excise invoices for the same which was issued to the Appellant.
• The Appellant claimed credit of Central Excise duty charged on aforesaid supplementary invoices which is the subject matter of dispute in the present Appeal. 
• Revenue contended that in terms of Rule 9(1)(b) of the Cenvat Credit Rules, 2004, the assessee would not be entitled to claim credit of duty on the strength of supplementary invoices issued by the supplier pursuant to payment of duty that became recoverable on account of non-levy or short levy by reasons of fraud or collusion.
• A Show Cause Notice was issued and the demand proposed therein was confirmed vide adjudication order dated 18.02.2011 consequent to disallowance of Cenvat Credit. The Appeal filed by the assessee before the Ld. Commissioner (Appeals) was also rejected against which the assessee is in appeal before this Tribunal.
• The appellant submitted that the bar of credit under Rule 9(1)(b) of the Credit Rules with regard to supplementary invoices is applicable only when the goods are sold by the supplier, which is not the fact herein. He submitted that the present arrangement does not involve any sale of goods by the conversion agent to the assessee appellant. 

Issue-

• Whether the restrictions from availing credit on the strength of supplementary invoice would apply in terms of Rule 9(1)(b) of the Credit Rules?

Order-

• The Tribunal observed that the Revenue has not disputed the legal position that the aforesaid Rule restricting the credit would not apply in case the credit has been availed on goods which are not sold by the supplier manufacturer, as already decided in the judgments referred by Appellant. It is the case of the Revenue that the assessee and the conversion agents are neither related nor sister unit and there is no stock transfer amongst the aforesaid parties.
•  On perusal of Rule 9(1)(b), Tribunal observed that the bar from availing credit on the supplementary invoice is only when the goods are sold to the recipient who has claimed the credit on the basis of supplementary invoices. There is no criterion laid down in the said Rules that the transferring unit should be a sister unit or a related party in order to become eligible for availing credit. The Revenue has not disputed the arrangements between the parties that the converted aluminium ingot has not been sold by the conversion agent to the assessee appellant.
• Further, the legal position already laid down by the Hon’ble Karnataka High Court as well as various coordinate Benches of this Tribunal.
• The Tribunal held that the demand cannot be sustained and is hence, set aside. The appeal is allowed with consequential relief.