CESTAT Allows CENVAT Credit On CVD, SAD Paid via DEPB Scrips, Quashes Duty Demand Against Asian Peroxides [Read Order]
The CESTAT holds that permits CENVAT credit through DEPB scrip payments.
![CESTAT Allows CENVAT Credit On CVD, SAD Paid via DEPB Scrips, Quashes Duty Demand Against Asian Peroxides [Read Order]](https://images.taxscan.in/h-upload/2026/03/23/2129922-cestat-allows-cenvat-credit-on-cvd-sadjpg.webp "CESTAT Allows CENVAT Credit On CVD, SAD Paid via DEPB Scrips, Quashes Duty Demand Against Asian Peroxides [Read Order]")
The Customs, Excise and Service Tax AppellateTribunal [CESTAT] Hyderabad Bench has held that the CENVAT credit is allowed for Countervailing Duty (CVD) and Special Additional Duty (SAD) even when the same is paid by debiting the Duty Entitlement Pass Book (DEPB) Scrip and not in cash. The appellant Asian Peroxides Ltd who is a manufacturer of Hydrogen Peroxide imported...
The Customs, Excise and Service Tax AppellateTribunal [CESTAT] Hyderabad Bench has held that the CENVAT credit is allowed for Countervailing Duty (CVD) and Special Additional Duty (SAD) even when the same is paid by debiting the Duty Entitlement Pass Book (DEPB) Scrip and not in cash.
The appellant Asian Peroxides Ltd who is a manufacturer of Hydrogen Peroxide imported the goods and paid the SAD under Section 3(5) and the CVD under Section 3(1) of the Customs Tariff Act, 1975, by debiting the same against the various DEPB licenses.
The Department raised a demand against the appellant by observing that the appellant had failed to pay the duty in cash as the Import Export Policy 2002-07 allowed the credit for the duty paid in cash. The Revenue also relied on Circular No. 20/2006 by observing that the Special CVD had to be paid in cash for the same to be allowed as credit.
The appellant submitted that the requirement of cash only payments is not mandated under Rule 3 of the CENVAT Credit Rules. She pointed out that the amendment of 2004 had removed the restriction relating to DEPB adjusted credit and relied on Circular No. 18/2006 which had explained that the 4% SAD debited through DEPB is indeed admissible to the benefit of the CENVAT.
Further,the revenue department relied on the findings of the lower authorities and stated that the licenses issued under the old policy had restrictions and that the credit is not admissible in the case of non-cash duty adjustments.
The Tribunal noted that the EXIM policy of 2004-09 specifically provided for the adjustment of the Additional Customs Duty paid through DEPB as a CENVAT credit.
Therefore,the Bench comprising A.K. Jyotishi [Technical Member] and Angad Prasad [Judicial Member] opined that denial of credit was unjust. Thus, the Tribunal set aside the order and allowed the appeals.
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