Credit of CVD and SAD Paid for Imports made before GST Regime is allowable: CESTAT rules in favour of Nayara Energy Ltd [Read Order]

As a relief to Nayara Energy Limited, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Credit of CVD and SAD Paid for Imports Made Before GST Regime is allowable.

The appellant is a manufacturer of Motor Sprits, High-Speed Diesel, Liquefied Petroleum Gas (LPG), etc. Appellant had imported capital goods which were cleared under Notification No. 54/2003Cus. dated 01.04.2003 by debiting the countervailing duty (CVD)  amounting to Rs. 18,37,92,521/-. The payments of these duties are made by way of debits in SFIS (Service from India Scrip).

The Appellant availed the Cenvat Credit of such CVD in terms of Rule 3 of Cenvat Credit Rules, 2004 which was objected to by the department and issued show cause notice alleging that since the Capital Goods had been cleared under the said Notification, the goods were exempted goods and as a consequence, the Cenvat Credit of CVD debited in the SFIS scrip was not admissible.

The Commissioner vide impugned order-in-original confirmed the recovery of the credit from the appellant under Rule 14 of the CCR 2004 read with Section 11A(10) of the Central Excise Act and ordered for the appropriation of Cenvat Credit reversed by the appellant under protest.

A Coram comprised of Mr Ramesh Nair, Member (Judicial)  and Mr Raju, Member (Technical) observed that as per Rule 3 of the Cenvat Credit Rules, any duty paid under Section 3 of the Customs Tariff Act is eligible for an assessee as Cenvat credit. It is also undisputed that the appellant in this case has paid the CVD by debit in the SFIS. 

The Appellant had imported capital goods under Notification No. 54/2003-Cus dated 01.04.2003 and Notification No. 94/2004-Cus dated 11.09.2004. In the Foreign Trade Policy, there is a specific provision to allow Cenvat Credit in respect of schemes like VKGUY, Target Plus, Focus Products Scheme but no such provisions were made for SFIS

It was evident that in the Foreign Trade Policy, there was neither an express provision to allow Cenvat credit of the CVD paid through debit in the SFIS scrip nor to disallow the Cenvat Credit of the CVD paid through SFIS.

The Tribunal set aside the impugned order and remitted the case to the Adjudicating authority with the direction to decide the admissibility of cenvat credit on disputed imported Capital Goods afresh by provisions of Cenvat Credit Rules, 2004. The appeal was allowed by way of remand to the Adjudicating Authority.

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