2015 (10) TMI 1553 - HC - Central Excise

Denial of CENVAT Credit - Customs duty as well as additional customs duty were paid using Duty Entitlement Pass Book (DEPB) scrips issued in terms of the 2002-07 Foreign Trade Policy (FTP) - Held that - In terms of the Notification No. 34/97-Customs dated 7th April 1997 goods specified in Schedule I to the Customs Tariff Act, 1975 (CTA) imported would be exempted from payment of the whole of the duty of customs as well as additional duty subject to importer having DEPB with sufficient credit. - Division Bench of Punjab and Haryana High Court in has in its order 2010 (4) TMI 281 - PUNJAB & HARYANA HIGH COURT (Commissioner of Central Excise v. M/s. Neel Kanth Rubber Mills) referred to the EXIM Policy which was amended by the Notifications dated 28th January 2004 and 17th September 2004 which entitled an importer to avail Cenvat credit of additional customs duty against the amount debited in the DEPB scrips. It was noted by the High Court that there was no condition in the said notifications that the debits made in the DEPB issued under a particular FTP alone would be eligible for CENVAT credit and that debits in a DEPB issued under a previous FTP would not be eligible for credit. - Court finds that the said decision indeed covers the issue against the Department on all fours. The Appellant has not been to show any notification by which the benefit of CENVAT credit has been expressly denied where the payment of customs duty or additional customs duty is made using DEPB scrips issued in terms of the FTP 2002-07. - No substantial question of law arises for consideration by the Court - Decided against Revenue.

Summary

Issues:
1. Appeal against final order of CESTAT under Section 35G of the Central Excise Act 1944.
2. Dispute regarding availing exemption under Notification No. 96/2004-Cus for imported raw materials.
3. Interpretation of Notification No. 96/2004-Cus for entitlement to CENVAT credit.
4. Conflict between Department's claim and High Court's decision regarding availing CENVAT credit.
5. Absence of appeal against High Court's decision by the Department.
6. Determination of substantial question of law.

Analysis:
1. The appeals filed by the Commissioner of Central Excise & Service Tax challenged the final order of CESTAT dated 16th January 2015 concerning Appeals Nos. E/571715 and 57178 of 2013 under Section 35G of the Central Excise Act 1944.

2. The dispute revolved around the Respondents, manufacturers of various products, importing raw materials and availing exemption under Notification No. 96/2004-Cus dated 17th September 2004 for goods chargeable to central excise duty during specific periods.

3. The Respondents utilized Duty Entitlement Pass Book (DEPB) scrips for paying customs duty and additional customs duty, subsequently claiming CENVAT credit. Notification No. 96/2004-Cus allowed for the entitlement to drawback or CENVAT credit against the amount debited in DEPB issued under specific Foreign Trade Policies.

4. The Department contended that CENVAT credit could only be availed if the DEPB issued under the FTP of 2004-09 was used for payment, contrary to the High Court's decision in Commissioner of Central Excise v. M/s. Neel Kanth Rubber Mills, which highlighted the absence of such a condition in relevant notifications.

5. Ms. Sonia Sharma, representing the Appellant, confirmed no appeal had been filed against the Punjab and Haryana High Court's decision favoring the Assessee, indicating a lack of challenge from the Department's side.

6. The Court concurred with the High Court's decision, emphasizing the absence of any notification expressly denying CENVAT credit when using DEPB scrips issued under the FTP 2002-07 for customs duty payments, leading to the dismissal of the appeals due to the lack of a substantial question of law for consideration.

This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed breakdown of the legal aspects and decisions involved in the case.