Availability of CENVAT Credit does not take away Taxability: CESTAT [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that availability of CENVAT Credit does not take away taxability.

M/s Pelican Grani Marmo Pvt Ltd, the appellant filed the appeal to assail the order passed by the Commissioner (Appeals), Central Excise and Central Goods and Service Tax, whereby the appeal filed by the appellant was partly allowed two appeals filed the appellant by setting aside the penalty imposed on it under Section 117 of the Customs Act, 1962 and reducing the penalties imposed under section 112(a) and rejected the remaining part of the appeal.

As a 100% EOU, the appellant is entitled to import goods duty free as per Notification No. 52/2003-CUS as amended from time to time. The exemption notification is subject to some conditions including a condition that the appellant executes a bond with a customs authority binding itself to pay on demand an amount equal to duty leviable on the goods and interest at a rate specified by the Notification issued under section 28AB in certain situations

As the appellant had consumed steel grits/ steel blade in excess of the norms, it appeared to the Revenue that the goods which were imported were in violation of the exemption notification and, therefore, were liable for confiscation under section 111(o) of the Act. Accordingly, it was also felt that the appellant was liable for penalty under sections 112 and 117 of the Act.

The Coram consisting of Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “Insofar as the appellant’s contention that if it had paid the customs duty, it would have been entitled to CENVAT credit to the extent of additional duty of customs is concerned, availability of CENVAT Credit does not take away the taxability. Otherwise, no manufacturer ever has to pay additional duty of customs because he would eligible for CENVAT credit of the amount so paid but such is not the scheme of the law.”

“If appellant is entitled to take CENVAT credit as per the CENVAT Credit Rules, it may take such credit” the Bench said

To Read the full text of the Order CLICK HERE

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