Can Buyers Claim CENVAT Credit on Supplementary Invoices Issued After Duty Suppression? Chhattisgarh HC

The Chhattisgarh High Court has reopened the legal debate on whether buyers are entitled to claim CENVAT credit on supplementary invoices issued by suppliers after payment of differential excise duty arising from alleged suppression of facts. The Bench of Justice Sanjay S. Agrawal and Justice Amitendra Kishore Prasad set aside an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and remanded the matter for fresh adjudication, holding that the Tribunal failed to pass a reasoned and speaking order while allowing credit in favour of Bharat Aluminium Company Limited (BALCO). At the heart of the dispute lies the interpretation of Rule 9(1)(b) of the CENVAT Credit Rules, 2004, which bars availment of CENVAT credit on supplementary invoices where additional duty becomes recoverable from the supplier due to fraud, wilful misstatement, suppression of facts, or intent to evade duty. The High Court was called upon to examine whether the Tribunal was justified in allowing BALCO to avail CENVAT credit despite allegations that the supplier, South Eastern Coalfields Limited (SECL), had paid differential excise duty pursuant to proceedings involving suppression of facts. BALCO, a major aluminium manufacturer based in Korba, procures coal—an essential input—from SECL, a public sector undertaking under Coal India Limited. The Excise Department initiated proceedings against SECL alleging undervaluation of coal by excluding statutory levies such as royalty, stowing excise duty, clean energy cess, transit fees, and other charges from the assessable value. Following adjudication, the Commissioner of Central Excise confirmed the duty demand against SECL by invoking the extended period of limitation and imposed penalty under Section 11AC of the Central Excise Act, 1944. SECL paid the differential duty under protest and subsequently issued supplementary invoices to its customers, including BALCO. BALCO availed CENVAT credit amounting to over ₹6.51 crore on the basis of these supplementary invoices. The Department, however, issued a show cause notice alleging that such credit was inadmissible under Rule 9(1)(b), as the supplementary invoices stemmed from duty demands involving suppression of facts by the supplier. In January 2018, the Commissioner disallowed the credit, ordered recovery with interest, and imposed an equivalent penalty on BALCO. However, the CESTAT overturned this decision in January 2019, holding that there was no fraud or suppression and that BALCO was entitled to credit, relying on earlier Tribunal rulings in similar matters. The Revenue challenged the Tribunal’s order before the High Court, arguing that the statutory bar under Rule 9(1)(b) operates based on the conduct of the supplier, not the buyer. According to the Department, once duty is paid by the supplier due to suppression and penalty proceedings, the recipient of inputs cannot claim credit on such supplementary invoices. The High Court found merit in the department’s contention that the Tribunal had failed to deal with the detailed and reasoned findings recorded by the adjudicating authority. The Bench observed that the Tribunal merely relied on previous decisions without independently examining whether the statutory conditions under Rule 9(1)(b) were attracted in the present case. Emphasising the importance of reasoned orders, the Court cited multiple Supreme Court precedents to reiterate that appellate bodies cannot overturn adjudication orders through cursory reasoning. The absence of a detailed analysis, the Court noted, rendered the Tribunal’s order legally unsustainable. Importantly, the High Court clarified that it was not expressing any opinion on the merits of whether BALCO is ultimately entitled to CENVAT credit. Instead, it held that the matter must be reconsidered by the Tribunal through a fresh, reasoned decision addressing every determinative issue. The High Court set aside the CESTAT order and remanded the case back to the Tribunal with directions to adjudicate the appeal afresh, after examining the findings of suppression, applicability of Rule 9(1)(b), and the legal consequences for the buyer claiming credit. Case Details Case Title: The Principal Commissioner Cgst And Central Excise Versus Bharat Aluminium Company Limited Case No.: TAXC No. 83 of 2019 Date: 23/01/2026 Counsel For Petitioner: Ashutosh Singh Kachhawaha Counsel For Respondent: Bhishma Ahluwalia, Advocate Click Here To Read Order Read More: Rs. 10.9 Lakh GST Demand Invalid as SCN Uploaded On GST Portal Under ‘Additional Notices’ Tab : Delhi HC

Can Buyers Claim CENVAT Credit on Supplementary Invoices Issued After Duty Suppression? Chhattisgarh HC

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