CESTAT upholds denial of Cenvat credit against Acculife Healthcare on Countervailing Duty Paid Without Demand [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has dismissed an appeal filed by M/s Acculife Healthcare Pvt Ltd (formerly Nirma Ltd), challenging the denial of Cenvat credit on Countervailing Duty (CVD) paid under the Advance Licence Scheme.

The appellant, during the period 1995 to 1998, had imported inputs and capital goods against advance licenses issued by Mumbai and Ahmedabad Customs. They failed to fulfil export obligations within the prescribed time, leading to a settlement before the Hon'ble Settlement Commission. The Commission determined a total customs duty liability (including CVD) of Rs. 1,698.52 lakhs.

Following the settlement, the appellant approached the jurisdictional authorities for a refund of Rs. 822.89 lakhs on the ground that they were directed to pay Modvat/Cenvat credit. While the Commissioner (Appeals) allowed credit of Rs. 752.22 lakhs, they rejected the balance claim of Rs. 70.67 lakhs.

The appellant argued that they had paid the CVD amount of Rs. 70.67 lakhs as per the Settlement Commission's final order and that since they were not required to pay CVD under Notification No. 79/95-Cus (which only exempted Basic Customs Duty), the amount paid was refundable and eligible for credit. They relied on precedents stating that duty paid but not required to be paid must be refunded.

The Revenue, represented by the Departmental Representative, submitted that the Settlement Commission's final order clearly established that the imports were under Notification No. 79/95-Cus, where only Basic Duty was exempt. It was contended that the appellant had paid the CVD amount voluntarily to settle their liability and, consequently, could not claim Cenvat credit for duty paid without a specific demand.

The CESTAT Bench, comprising Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Mr. Satendra Vikram Singh, perused the Settlement Commission's order. The Commission noted that the differential duty payable by the appellant was Rs. 1,636.19 lakhs, which was admitted by the appellant.

The Bench observed that the amount of Rs. 70.67 lakhs claimed as CVD credit by the appellant was not reflected as a duty liability in the Settlement Commission's order. It was found that the goods were imported under Notification No. 79/95-Cus, where only Basic Customs Duty was exempt, and not CVD.

Agreeing with the findings of the Commissioner (Appeals), the Tribunal held that the CVD amount in question was paid by the appellant voluntarily without a specific demand and, therefore, was not admissible for Cenvat credit. The Tribunal upheld the rejection of the credit claim and dismissed the appeal.

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