2012 (11) TMI 1035 - AT - Central Excise

Payment of SAD - SAD on scoured wool - Availment of Credit - Held that - appellant has availed the credit in their statutory records maintained by them in the ordinary course of business. Such availment of credit was duly reflected in the returns filed by them. As such the appellant cannot be attributed with any suppression or misstatement of facts especially when the entry against Sl. No. 36 of Notification No. 20/2006 is not covering the goods by clear description. Further, the Customs authorities also accepted SAD paid by the appellant at the time of import of the goods and never questioned the same. In such a scenario, the subsequent issuance of show cause notice proposing to deny the credit without making any reference to the duty admitted paid by the appellant is neither just nor proper - Decided in favour of assessee.

Summary

Issues:
1. Payment of Special Additional Duty (SAD) on imported scoured wool.
2. Entitlement of Cenvat credit for the paid SAD.
3. Interpretation of Notification No. 20/2006-Cus regarding exemption of SAD.
4. Validity of show cause notice denying Cenvat credit.
5. Application of the decision in V.G. Steel Industry case.
6. Admissibility of Cenvat credit as per Cenvat Credit Rules.
7. Limitation period for the show cause notice issuance.

Analysis:
The appellant imported scoured wool and paid duties of customs including SAD, availing credit of SAD in their Cenvat credit accounts. Revenue contended that scoured wool was exempt from SAD as per Notification No. 20/2006, leading to denial of SAD credit. A show cause notice was issued in 2008 seeking denial of Cenvat credit, culminating in an order confirming the demand and imposing a penalty, which was upheld by the Commissioner (Appeals).

Upon review, it was found that the appellant had indeed paid SAD at the time of clearance, based on uncertainty whether scoured wool fell under the exemption category. The Customs accepted the payment without challenge. The appellant maintained proper records and reflected the credit in their returns, without any intent to suppress facts. The issuance of the show cause notice without acknowledging the duty paid was deemed unjust.

The appellant's reliance on the V.G. Steel Industry case was deemed appropriate, emphasizing that duty paid in excess is admissible as Cenvat credit to prevent double taxation. Denying the credit would lead to unjust enrichment for the Revenue. Additionally, the Cenvat Credit Rules allow credit for duty "paid" by the importer, which cannot be denied unless the amount paid is in dispute.

Moreover, the show cause notice issued in 2008 was considered time-barred due to the absence of any intent to evade duty payment by the appellant. Thus, the impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant.