CESTAT allows Cenvat Credit on 2% CVD [Read Order]

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the Cenvat credit in respect of 2% CVD.

The appellants, Arihant Tradelinks India and Maha Shakti Coke have availed Cenvat credit of CVD paid on input namely, coal of various types either directly imported by the appellant or purchased from other importers. The import documents in respect of such coal indicate that CVD at the rate 2% was paid in terms of Customs Notification No. 12/2012-Cus dated 17.03.2012 (as amended) and accordingly, appellants have paid CVD @ 2% and availed Cenvat credit thereof. The appellants were issued show cause notices wherein it was contended that admissibility of Cenvat Credit is governed by the Cenvat Credit Rules 2004. Rule 3(1) of Cenvat Credit Rules, 2004 prescribes some specific types of duties, which are allowed to be eligible as Cenvat Credit. 

The additional duty of customs is a duty equal to duty of excise for the time being leviable on like article, if produced or manufactured in India. Clause (vii) of sub Rule (1) of Rule 3 of Cenvat Credit Rules, 2004 permits availing Cenvat credit of additional duty leviable under Section 3 of the Customs Tariff Act (commonly known as CVD) subject to the condition that the CVD must be equivalent to the duty of excise specified under clauses (i), (i), (i), (iv), (v), (vi) and (via) of the said rules. The term “equivalent” has greater significance that in any case, if the CVD paid is not equivalent to the duty of excise as specified under clauses (i), (i), (i), (iv). (v), (vi) and (via) of Rule 3(1) of Cenvat Credit Rules, 2004, credit thereof is not allowed to the manufacturer. 

It was further contended in the show cause notices that appellant is eligible for CVD credit paid is the same which is equal to duty of excise specified under Central Excise Tariff heading 2701 i.e. 5%/6% ad valorem as per Central Excise Tariff Act, 1985. Since the appellant has not paid duty at the Central Excise tariff rates and have paid duty less than that, as per Customs Notification No. 12/2012-Cus, appellant are not eligible for Cenvat credit. The Adjudicating Authorities, vide impugned orders confirmed the demand of Cenvat credit availed by the appellant and also imposed equal penalty. Therefore the present appeals filed by the appellants.

The coram of Judicial Mmeber, Ramesh Nair and Technical Member, Raju held that he issue involved is purely of interpretation of Cenvat Credit Rules, levy of CVD in terms of Customs Tariff Act. It is also the fact that on identical issue many cases were made out by the department across the country in respect of different assessees which clearly shows that the issue involved is of interpretation of law. In this situation, malafide intention cannot be attributed to the appellant. The appellant have been declaring availment of Cenvat credit in respect of 2% CVD and the same were reflected in monthly ER-1 returns. Therefore, there is absolutely no suppression of facts or mis-declaration etc. on the part of the appellant. Accordingly, the demand for extended period is not sustainable on the ground of time-bar also.

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