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2017 (1) TMI 921 - AT - Central ExciseWhether Cenvat credit can be permitted when CVD is paid using the DEPB? - Held that - the issue was very much disputed by different benches of the Tribunal and held differently - the dispute has been going on for fairly a long time which came to be decided against the assessee only by the decision of the larger bench it is concluded that the issue was disputed. Under the circumstances it cannot be alleged that the appellant indulged in suppression of facts with deliberate intent to avail ineligible Cenvat credit. Consequently the Show Cause Notice dated 31.1.2008 which has been issued covering the period March 2003 to December 2005 is to be held as time barred. In this view of the matter no part of the demand will survive. The other ground on which the demand has been upheld in the impugned order is that some of the credits have been available on the basis of DEPB scrips issued under the earlier Foreign Trade Policy (2002-2007). In the light of the circular issued by the Board the Cenvat credit has been denied. This issue has since been settled in favor of the appellants by the Hon ble High Court Delhi. In the case of Commissioner of Delhi Vs. Havells India Ltd. 2015 (10) TMI 1553 - DELHI HIGH COURT it was held 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. Appeal allowed - decided in favor of appellant.
Issues:
1. Availment of Cenvat Credit against DEPB without cash payment of CVD. 2. Allegation of suppression and time-barred Show Cause Notice. 3. Interpretation of Customs Notification No. 96/2004-Cus. 4. Dispute over availment of Cenvat credit for CVD paid using DEPB under different Foreign Trade Policies. 5. Denial of Cenvat credit based on DEPB scrips issued under previous Foreign Trade Policy. 6. Settlement of issues by the Hon'ble High Court, Delhi. Analysis: 1. The appellant availed Cenvat Credit amounting to ?45,26,087 on items imported between March 2003 to December 2005 by adjusting CVD in DEPB without cash payment, contravening Export Import Policy 2002-2007. A Show Cause Notice was issued for disallowance and recovery under Rule 12 and 14 of Cenvat Credit Rules, 2004, along with interest and penalties. The Order-In-Original disallowed the credit and imposed penalties. 2. The appellant argued that the issue was disputed during the relevant period and cited a decision by the CESTAT in the ESSAR Steel Ltd. case, claiming the Show Cause Notice was time-barred. They also referenced Customs Notification No. 96/2004-Cus and a High Court decision in the Havells India Ltd. case to support their position. 3. The Department supported the orders, citing Circular No. 59/2004-Cus and the conditions under the Foreign Trade Policy. The issue of Cenvat credit for CVD paid using DEPB was contentious, leading to conflicting Tribunal decisions and a larger bench ruling in the Essar Steel Ltd. case. 4. The Tribunal noted the long-standing dispute over Cenvat credit for CVD paid with DEPB, ultimately deciding in favor of the appellant due to the unsettled nature of the issue. The Show Cause Notice was deemed time-barred, and the demand was invalidated. 5. The denial of Cenvat credit based on DEPB scrips issued under the previous Foreign Trade Policy was challenged by the appellant, citing a High Court decision in the Havells India Ltd. case. The Court found in favor of the appellant, highlighting the lack of specific conditions in the relevant notifications. 6. The judgment was set aside, and the appeal was allowed based on the comprehensive arguments presented by the appellant and the legal interpretations provided by the Tribunal, ultimately resolving the issues in favor of the appellant.
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