2014 (7) TMI 1052 - AT - Central Excise

Eligibility of CENVAT Credit of SAD paid u/s 3(5) of CTA - Whether the appellants were eligible to avail of Cenvat credit on special additional duty (SAD)/special CVD paid at four per cent, under sub-section (5) of section 3 of the Customs Tariff Act during the relevant period - Held that - On a careful reading of the relevant show-cause notice and the order-in-original, it has been acknowledged by the Department in clear terms that the appellant had availed of Cenvat credit on the special countervailing duty on the basis of dealer s invoices wherein the said duty has been levied and paid by the respective importer. Thus, the issue of payment of SAD/special CVD at four per cent, by the importer was not a dispute either in the show-cause notice or observed in the respective orders-in-original passed by the adjudicating authority. The special additional duty (SAD)/special CVD at four per cent, levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 has been included in the list of duties under rule 3 of the Cenvat Credit Rules from March 1, 2005 by issuance of Notification No. 13/2005-CE (N.T.) - No reason for denying the Cenvat credit of the amount of SAD/special CVD paid by the importer and mentioned in the respective dealer s invoices - Decided in favour of assessee.

Summary

Issues:
- Eligibility of Cenvat credit on special additional duty (SAD)/special CVD at four per cent under the Customs Tariff Act.
- Interpretation of Notification No. 13/2005-CE (N.T.) and its applicability to the case.
- Requirement of relevant documents to establish payment of special additional duty (SAD)/special CVD.
- Observance of Cenvat Credit Rules, 2004 in allowing Cenvat credit.

Analysis:
The case involved two appeals filed against orders passed by the Commissioner of Central Excise (Appeals) concerning the eligibility of the appellant to avail Cenvat credit on special additional duty (SAD)/special CVD at four per cent under the Customs Tariff Act. The appellant, engaged in manufacturing excisable goods, had availed Cenvat credit on the mentioned duty, which was challenged through show cause-cum-demand notices. The issue revolved around the admissibility of this duty as Cenvat credit, as it was not initially specified under rule 3 of the Cenvat Credit Rules, 2004.

The appellant contended that an amendment to the Cenvat Credit Rules through Notification No. 13/2005-CE (N.T.) made the special additional duty (SAD)/special CVD eligible for Cenvat credit. The appellant relied on a previous tribunal judgment to support this argument. Conversely, the Revenue argued that the appellant failed to provide sufficient evidence, such as relevant documents and certificates, to establish the payment of the duty, rendering them ineligible for Cenvat credit.

Upon review, the Tribunal found that the amendment to the Cenvat Credit Rules indeed included the special additional duty (SAD)/special CVD at four per cent under the Customs Tariff Act as eligible for Cenvat credit. The Tribunal dismissed the Revenue's argument regarding lack of evidence, noting that the Department acknowledged the appellant's availing of Cenvat credit based on dealer's invoices where the duty was paid by the importer. The Tribunal emphasized that the issue was solely about the admissibility of the duty as Cenvat credit, which was clarified by the inclusion of the duty in the Cenvat Credit Rules post-amendment.

Ultimately, the Tribunal set aside the order-in-appeal passed by the Commissioner (Appeals) and allowed the appeals filed by the appellant, affirming their eligibility for Cenvat credit on the special additional duty (SAD)/special CVD at four per cent under the Customs Tariff Act.