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2016 (6) TMI 868 - AT - Central ExciseCenvat credit of Education Cess and Secondary and Higher Education Cess debited through DEPB credit - Held that - The payment of additional duty of excise (CVD) is governed by sub-section (1) of Section 3 of Customs Tariff Act, 1975 and the exemption from this duty in import of goods is contained under Notification No.89/2005. The main contention of Revenue is that in Notification No.89/2005-Cus. dt. 04/10/2005, though credit on CVD is allowed, it does not mention anything about Education Cess payable as part of CVD. The rate of CVD applicable on the imported goods is the rate of total duties of excise which is inclusive of Education Cess and Secondary and Higher Education Cess payable on the aggregate of the other duties of excise. Therefore the contention of the appellants that Education Cess and Secondary & Higher Education Cess payable on that part of CVD which is equal to the basic excise duty is a part of CVD itself is not without substance. Appellants have succeeded in establishing a case in their favour. The denial of credit is unjustified. In the result, the impugned order is set aside. - Credit allowed - Decided in favor of assessee.
Issues:
- Admissibility of credit on Education Cess and Secondary Higher Education Cess debited in DEPB certificates under Notification No.89/2005-Cus. - Interpretation of Section 3(1) of the Customs Tariff Act, 1975 regarding additional duty of customs (CVD) and its relation to Education Cess and Secondary Higher Education Cess. - Eligibility of CENVAT credit on duties paid by debiting DEPB license. - Applicability of Circular No.5/2005-Cus regarding debiting Cess from DEPB Scrip. Analysis: 1. Admissibility of Credit on Cess: The case revolved around the appellants availing credit of Education Cess and Secondary Higher Education Cess debited in DEPB certificates, which was challenged by the Revenue. The dispute arose from the interpretation of Notification No.89/2005-Cus., which did not explicitly mention these Cesses. The Revenue contended that credit should be restricted to basic excise duty alone, while the appellants argued that the CVD rate includes Education Cess and Secondary & Higher Education Cess. The Tribunal analyzed the relevant provisions and held that the appellants were eligible for the credit of these Cesses as part of CVD. 2. Interpretation of Customs Tariff Act: Section 3(1) of the Customs Tariff Act, 1975 was crucial in determining the additional duty of customs (CVD) on imported goods. The Tribunal examined the duties of excise leviable on goods produced in India, including Education Cess and Secondary & Higher Education Cess. It concluded that the rate of CVD applied to imported goods encompasses these Cesses, contrary to the Revenue's argument. The Tribunal referenced past judgments to support this interpretation, emphasizing that CVD includes amounts equivalent to excise duty and Cess on such duty. 3. Eligibility of CENVAT Credit: The question of whether CENVAT credit could be claimed on duties paid by debiting DEPB license was deliberated. The Revenue contended that only duties paid in cash were eligible for credit, while the appellants argued that Circular No.5/2005-Cus permitted debiting Cess from DEPB Scrip. The Tribunal referred to precedent cases where CENVAT credit was allowed on duties paid by debit in DEPB, emphasizing that the denial of credit in this case was unjustified. 4. Applicability of Circular No.5/2005-Cus: The issue of debiting Cess from DEPB Scrip was raised, with the appellants citing Circular No.5/2005-Cus to support their position. The Tribunal considered past judgments and circulars to establish that such debiting was permissible, further strengthening the appellants' case. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal with consequential reliefs. This detailed analysis of the judgment highlights the key legal issues, interpretations of relevant provisions, and the Tribunal's reasoning in arriving at its decision.
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