2017 (12) TMI 161 - AT - Central Excise

CENVAT credit of CVD - denial on the ground that in terms of Para 4.3.5 of the Exim Policy the cenvat credit of CVD paid through DEPB is not eligible for credit - Held that - we find that once the para 4.3.5 was amended to remove the lines which denied credit of CVD paid through DEPB, the Appellant are eligible to avail cenvat credit - in case of seven bills of entry pertaining to period post 28.01.2004, there was no restriction in the law to avail the cenvat credit of CVD paid through debit in DEPB. Hence there is no reason to disallow credit for the said period - the period post 28.01.2004 when the prohibition was removed the cenvat credit cannot be denied and hence available to the Appellant - in case of bills of entry post 28.01.2004 the cenvat credit is available to the Appellant on merit. Extended period of limitation - Held that - In case of Bills of entry of period prior to 28.01.2004 we find that the show cause notice does not brings out any malafide intention on the part of the Appellant to avail ineligible credit. Even the issue involved is of interpretation and no malafide can be alleged - the demands for the period prior to 28.01.2004 involving two bills of entry in the present case are hit by limitation and the demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of cenvat credit of CVD paid under Nine bills of entry through debit in DEPB passbook.
2. Interpretation of Para 4.3.5 of the Exim Policy regarding eligibility of cenvat credit.
3. Prospective or retrospective nature of the amendment in the EXIM Policy dated 28.01.2004.
4. Applicability of the judgment in cases of M/s Essar Steel Vs. CCE and CCE Vs. Deepak Spinners.
5. Invocation of extended period for demand in case of bonafide belief.

Analysis:
1. The appellant availed credit of CVD paid under Nine bills of entry through debit in DEPB passbook. The show cause notice proposed disallowance of credit based on Para 4.3.5 of the Exim Policy, which was later amended to allow such credit. The adjudicating authority allowed the credit, but the revenue appealed contending that the amendment was prospective. The Appellate Commissioner, relying on previous judgments, denied credit post 28.01.2004, leading to the present appeal.

2. The Ld. Counsel for the Appellant argued that the notification of 28.01.2004 was clarificatory and credit was always available. He cited the judgment of the Madras High Court to support his claim. He also contended that the demand was time-barred, citing judgments where extended period was not invoked in cases of disputed issues.

3. The Revenue reiterated the findings in the impugned order, maintaining their stance on denying credit post 28.01.2004. The Tribunal observed that the amendment in Para 4.3.5 made the credit available for the period post 28.01.2004. The judgment of the Madras High Court was cited to support the availability of credit post amendment, distinguishing it from previous tribunal decisions.

4. The Tribunal found that for bills of entry post 28.01.2004, the cenvat credit was available to the Appellant. The judgment in cases of Essar Steel and Deepak Spinners was distinguished based on the Madras High Court's decision. The Tribunal held that the demands for the period prior to 28.01.2004 were hit by limitation due to bonafide belief and the demand was not sustainable.

5. Considering the above observations and findings, the Tribunal held the impugned order unsustainable and set it aside, allowing the appeal with consequential reliefs. The judgment was pronounced on 30/11/2017.