The High Court of Calcutta has held that there is no bar for availing CENVAT Credit under Rule 3(7) when concessional countervailing duty (CVD) is availed.
Mr Vipul Kundalia, Sr. Adv. Mr Tapan Bhanja, Adv. Appeared for the Appellant and Mr Abhratosh Majumdar, Sr. Adv. Mr Rahul Dhanuka, Adv appeared for the Respondent.
The respondent-assessee, m/s. Shyam Steel Industries Ltd is engaged in the manufacture of Sponge Iron, Billet, TMT Bars and the principal inputs used in the manufacture of final products are Pig Iron, Sponge Iron and Scrap.
The department issued a Show Cause notice proposing to reverse the CENVAT Credit and also impose penalties and levy interest. The department alleged that the assessee contravened the provisions of Rule 2(a) and 2(k) of the CENVAT Credit Rules 2004, read with Rule 3 and 4 of the CENVAT Credit Rules, 2004 by mis-declaring the goods as inputs and by deliberately suppressing the facts of taking the inadmissible input credit the intent to evade payment of duty.
The assessee filed an appeal before the Commissioner of CGST and Central Excise (Appeal), Siliguri Commissioner (Appeals), who partly allowed the appeal by order dated 18.06.2018, but the reverse of the CENVAT Credit, recovery of interest and penalty was affirmed. On appeal, the tribunal by the impugned order dated 21.12.2021 has allowed the appeal.
The revenue contended that Rule 3(1)(i) of the CENVAT Credit Rules, 2004 provides that the manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (CENVAT Credit) of the duty of excise specified in the first schedule to the Excise Tariff Act leviable under the Excise Act provided that CENVAT Credit of such duty of excise shall not be allowed to be taken when paid on any goods specified in Serial Nos. 67 and 128 in respect of which the benefit of an exemption under Notification 12-2012-CE dated 17.03.2012 is availed.
It was observed that while availing the “Basic Customs Duty” (BCD) Exemption at 10 % under FTA can simultaneously avail of the concessional countervailing duty (CVD) at 2 % as per notification No. 12/2012-Customs or he has to pay the CVD at 6 %, which is the rate of excise duty applicable on Steam Coal when CENVAT facility has not been availed.
Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya viewed that the tribunal had rightly granted relief in favour of the respondent-assessee and dismissed the appeal filed by the revenue.
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