Cenvat credit is not available on photocopies of invoices without certification.

PJ/Case Laws/2012-13/1416

Case: DSM SUGAR V/S COMMISSIONER OF CENTRAL EXCISE, MEERUT-II

Citation: 2013(287) E.L.T. 236 (Tri.-Del.)

Brief Facts: - The appellants are company having sugar mills at Asmoli, Moradabad, Dhampur, Rajpura and Masudpur. The present dispute is in respect of sugar mill at Asmoli. The dispute is in respect of Cenvat credit of amount Rs. 2,99,520/- availed by the appellant during the period from February, 2008 to October, 2008 on the basis of either photocopies of invoices or duplicate copies of the invoices of input service provider. The department having the view that the documents on the basis of which Cenvat credit has been taken are not valid documents as prescribed in Rule 9 of Cenvat Credit Rules, issued a show cause notice for denial of the Cenvat credit along with interest. The jurisdictional Assistant Commissioner vide order-in-original dated 12-11-2009 confirmed the Cenvat credit demand of Rs. 2,99,520/- along with interest and imposed penalty of Rs. 10,000/- on the appellant. This order of the Assistant Commissioner was upheld by Commissioner (Appeals) vide order-in-appeal dated 31-3-2010. Against this order of Commissioner (Appeals), this appeal has been filed. The appellants are not pressing for the Cenvat credit in respect of club bills and they are contesting the Commissioner (Appeals)’s order only with regard to denial of Cenvat credit taken on the basis of photocopies of invoices or duplicate invoices.

Appellant’s Contention: - The appellant contended that in some cases, credit has been taken on the basis of duplicate copies of invoices used by input service providers as the originals had been lost/misplaced as a result of which the appellants obtained duplicate invoices from the service providers, that in cases where the Cenvat credit has been taken on the basis of photocopies of the invoices, since only one original invoice is available and on the basis of the same, four factories of the appellant have taken proportionate credit, the original copies of the invoices were not available with the unit, that during the period of dispute the head office of the appellants company was not registered as input service distributor and therefore on the basis of one original invoice of particular service provider, the four sugar mills of the appellants were taking proportionate credit on the basis of the photocopies of the same, that original invoices were available, that if the adjudicating authority or the appellate authority had asked for the production of original invoices, the same would have been produced and that in view of this, the impugned order disallowing the Cenvat credit is not correct. They cited the judgment of Hon’ble Chhatisgarh High Court in the case of Union of India v. Hira Steels Ltd. reported as 2011 (273) E.L.T. 370 (Chhatis.) wherein it was held that Cenvat credit on the basis of photocopies or extra copies of the invoices can be allowed when the same have been verified by the jurisdictional Superintendent of the input supplier and also cited the judgment of Hon’ble Gujarat High Court in the case of Steelco Gujarat Ltd. reported as 2010 (255) E.L.T. 518 (Guj.) wherein it was held that Cenvat credit can be taken on the basis of Xerox copies duly attested by the jurisdictional Superintendent. He also cited the judgment of Tribunal vide Final Order No. A-837/2012, dated 18-7-2012, wherein similar circumstances, Tribunal remanded the matter to the original adjudicating authority for de novo decision. He therefore pleaded that the impugned order is not correct.

Respondent’s Contention: - The respondent argued that even from the judgment of Hon’ble Gujarat High Court in the case of Steelco Gujarat Ltd. and the judgment of Hon’ble Chhatisgarh High Court in the case of Union of India v. Hira Steels (supra), it is clear that where the credit has been taken on the basis of photocopies or extra copies of the invoices, the same must be duly verified and attested by the jurisdictional Superintendent as permitting the same may result in Cenvat credit being taken more than once on the basis of the same invoices. He also pleaded that during the period of dispute, the head office of the appellants-company should have obtained registration as input service distributor and thereafter distributed the Cenvat credit but this has not been done and that on the basis of one invoice issued by as input service provider in the name of head office, different factories of the company cannot take proportionate credit. He, therefore, pleaded that there is no infirmity in the impugned order of the Commissioner (Appeals).

Reasoning of Judgment: - The Hon’ble Tribunal held that as per Rule 9(1) of Cenvat Credit Rules the invoice/challan or bill issued by as input service provider or by an input service distributor is a valid document for availing Cenvat credit. In this case, during the period of dispute, while the appellants-company had several factories, the head office of the appellants-company was not registered as input service distributor and as such no invoices under Rule 4A of the Service Tax Rules, 1994 were being issued by the head office as input service distributor. From the records of this case, it is clear that the appellants unit has taken Cenvat credit on the basis of photocopies/duplicate copies of the invoices. So far as duplicate copies of the invoices are concerned, the appellant plead that the original copies have been lost and therefore duplicate copies had been issued by the supplier. However, these duplicate copies have not been certified or verified by the Jurisdictional Central Excise Officer. In view of this, they hold that so far as duplicate copies are concerned, the same cannot be treated as valid documents and Cenvat credit has been correctly denied.

As regards Cenvat credit taken on the basis of photocopies of the invoices, though Rule 9(1) of Cenvat Credit Rules, does not mention that the invoice/bill or challan has to be the original, if Cenvat credit is allowed on the basis of photocopies without any check, credit can be taken more than once on the basis of the same invoices. Therefore, Cenvat credit cannot be allowed on the basis of photocopy of invoices/bill or challan. In this case, though the appellants pleaded that original copy of the invoice was available and since on the basis of one original copy, several units of the appellant’s company have taken proportionate amount of credit and for this reason, the appellant’s unit has only the photocopy on its record, from the records it is seen that at no stage the original copy of the invoice was produced. In any case, when during the period of dispute, the facility of distribution of Service tax Cenvat credit by the head office by issuing invoices after registration as Input Service Distributor was available, there is no explanation as to why that facility has not been availed. In view of this, Cenvat credit on the basis of photocopies has been correctly disallowed.

Decision: - The appeal was dismissed.

Comment:-The essence of the case is that whenever photo copies of invoice are used for availing the Cenvat Credit, they should be duly verified or certified by the jurisdictional Central Excise Officer as it may lead to denial of credit at later stage.

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PJ/Case Laws/2012-13/1416

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