2010 (9) TMI 378 - AT - Central Excise

Cenvat credit import against advance licence differential additional duty paid on material, utilized in the manufacture - which have been cleared for home consumption on payment of duty assessee took credit of the additional duty of customs SCN alleging that the credit is not available Held that - that Bill of Entry is the valid document prescribed and no provision has been made in the rules to take care of such a situation where additional duty is paid subsequently, cannot deprive the appellants of their substantive right to take credit having paid the duty and having utilized the components in the production of dutiable gods - appeal is allowed

Summary

Issues:
Import of components without duty payment against advance license, payment of additional duty on unutilized components, availability of credit for additional duty paid, validity of Bill of Entry as a document for taking credit.

Analysis:
The case involved the import of components for circular knitting machines without duty payment initially against an advance license. Some components were not used for export production, and the appellants paid the additional duty on these unutilized components. The appellants then utilized these components in manufacturing machines for home consumption, for which they obtained a certificate from customs authorities. A show-cause notice was issued alleging that credit was not available, leading to duty demand confirmed by lower authorities.

Upon review, it was found that the appellants did not pay duty initially as the imports were for export production. However, they paid duty on unutilized components later and were not in contravention of any Customs or EXIM Policy provisions. The appellants were only demanded differential duty on unutilized components used in producing goods for home consumption. The judgment highlighted the appellants' right to credit for the additional duty paid on unutilized components used in manufacturing dutiable goods. It emphasized that the absence of provisions in rules regarding subsequent duty payment should not deprive appellants of their substantive right to credit, considering they paid duty and utilized components for dutiable goods production.

Therefore, the duty demand against the appellants was deemed unjustified, leading to setting aside of the impugned order and allowing the appeal. The judgment emphasized the appellants' right to credit for additional duty paid on unutilized components utilized in manufacturing goods for home consumption, despite the absence of specific provisions in rules regarding subsequent duty payment and credit taking procedures.