2004 (12) TMI 529 - AT - Central Excise

Summary

Issues:
1. Admissibility of Cenvat credit of Customs duty and CVD under DEPB Scheme.
2. Interpretation of Rule 3(vi) of the Cenvat Credit Rules, 2002.
3. Applicability of Cenvat Credit Rules, 2002 to the period in question.

Analysis:
1. The case involved a dispute regarding the admissibility of Cenvat credit of Customs duty and CVD under the Duty Entitlement Pass Book (DEPB) Scheme. The respondents had claimed credit on the strength of a Bill of Entry but were denied by the original authority. The Commissioner (Appeals) allowed the appeal based on a Tribunal decision. However, the Revenue challenged this decision citing Exim Policy 1997-2002 and Tribunal rulings in other cases. The Tribunal noted that the Exim Policy prohibited Cenvat credit if adjusted under DEPB Scheme. Referring to the decision in Essar Steel Ltd. and Bloom Dekor Limited cases, the Tribunal held that Modvat credit for CVD debited to the pass book was not permissible. Consequently, the Tribunal set aside the Commissioner's order and allowed the Revenue's appeal.

2. The respondents argued that Rule 3(vi) of the Cenvat Credit Rules, 2002 allowed manufacturers to take credit of additional duty under the Customs Tariff Act. However, the Tribunal observed that the dispute pertained to a period predating the applicability of the Cenvat Credit Rules, 2002. Relying on the precedents set by the Tribunal in similar cases, the Tribunal concluded that Modvat credit for CVD debited to the pass book was not permissible. Therefore, the argument based on Rule 3(vi) was not considered relevant in this context.

3. The Tribunal clarified that the dispute in question related to a time period before the implementation of the Cenvat Credit Rules, 2002. As such, the provisions of the Rules were not applicable during the period from 24-9-1998 to 12-10-1998. Considering the decisions of the Larger Bench in previous cases, the Tribunal reiterated that Modvat credit for CVD debited to the pass book was not allowable. Consequently, the Tribunal set aside the Commissioner's decision, ruling in favor of the Revenue.