2007 (8) TMI 53 - AT - Central Excise

Cenvat/Modvat - Department contended that appellant is not entitled to take CENVAT credit of the amount debited in DEPB towards payment of CVD - Held that department contention was not correct and allowed credit

Summary

Issues:
Availment of CENVAT credit on duty paid in cash, Admissibility of CENVAT credit without specified document under Rule 9(1) of CCR 2004.

Analysis:

Issue 1: Availment of CENVAT credit on duty paid in cash
The appellants imported inputs for manufacturing paper and paperboards, paying Basic Customs Duty (BCD) and countervailing duty (CVD) through debits in DEPB license. The department objected to the appellants availing CENVAT credit of Rs. 53,74,651/-, equivalent to the total CVD and Education Cess debited in DEPB license, arguing that credit could only be taken for duty paid in cash. The ld. Commissioner ordered recovery of the credit under Rule 14 of CCR 2004, along with interest and imposed a penalty. The appellate tribunal noted that Notification No. 96/2004-Cus. allowed importers to avail drawback or CENVAT credit of CVD debited in DEPB. The tribunal held that the appellants were entitled to the credit as the imports were made after the issuance of DEPB licenses post-17-9-2004. The tribunal rejected the department's objection that CENVAT credit was not admissible for duty not paid in cash, emphasizing that the benefit of the notification could not be denied.

Issue 2: Admissibility of CENVAT credit without specified document under Rule 9(1) of CCR 2004
The ld. Commissioner also denied the credit on the grounds of absence of specified documents under Rule 9(1) of CCR 2004, stating that debits in DEPB were not duty payments. The tribunal disagreed, finding that the Bills of Entry contained all necessary details of debits in DEPB for payment of CVD on imported goods. The tribunal held that Bills of Entry were specified documents under Rule 9(1) for availing CENVAT credit. It was noted that the entries were duly verified and certified by the customs officer, and the credit was taken based on these certified entries. The tribunal concluded that the appellants were entitled to the CENVAT credit of the debited amounts in DEPB as per the Bills of Entry.

In conclusion, the tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellants based on the legal interpretation of the relevant rules and notifications.