2019 (7) TMI 250 - AT - Customs

Payment of CVD at exempt rate and CENVAT credit - CVD of 1% /2% of the Additional Duty of Customs on the imported coal - benefit of N/N. 12/2012-Cus dated 17.03.2012 - Department has denied the payment of CVD on exempted rate and the availment of cenvat credit thereupon relying upon the S.No. 67 of Excise Notification No. 12/2012 dated 17.03.2012 - HELD THAT - The Customs Notification is applicable to the imported coal whereas the Excise Notification is applicable to the domestically manufactured goods. The condition No. 25 of Excise Notification which denies availment of cenvat credit on imports of coal manufactured by the supplier of coal, as has been taken the basis in the Order-in-original, shall therefore be applicable for domestically manufactured goods only and not on the imported coal. Perusal of Excise notification No. 67 further reveal that no such condition is applicable in case of import of coal. Whether under Customs notification against S.No. 67 i.e. while importing the coal, the appellants were entitled to avail the cenvat credit on the amount of CVD paid? - HELD THAT - The said rule itself clarifies that the cenvat credit of duty of excise is not allowed to be taken when paid on any goods specified under S.No. 67 and 128 of Excise Notification No. 12/2012 dated 17.3.2012. Admittedly, the notification relied upon by the department for denying the impugned benefit to the appellant is Customs Notification No. 12/2012 dated 17.3.2012. The restriction of Rule 3 is not applicable to the said notification - Hon ble Supreme Court in the case of SRF Ltd. vs. CC Chennai 2015 (318) ELT 607(SC) has held that Excise Notification No. 12/2012 is applicable only in respect of any digged or manufactured coal and not in respect of imported coal. The import whereof is allowed to have exempted rate of CVD vide Customs Notification No. 12/2012 Cus. The adjudicating authority has committed a legal error while denying the benefit of reduced CVD on imported coal while placing reliance upon the Excise notification for manufacture of coal - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of cenvat credit on imported coal under Customs Notification No. 12/2012-Cus dated 17.03.2012.

Analysis:
The appeal in question arose from a Show Cause Notice objecting to the admissibility of cenvat credit on imported coal. The appellants, engaged in the manufacture of cement, availed cenvat credit on various inputs, including coal used in their captive power plant. The dispute revolved around the denial of the benefit of reduced Additional Duty of Customs (CVD) under Notification No. 12/2012-Cus dated 17.03.2012. The appellants had paid CVD at a reduced rate of 1% / 2% during a specific period, but this benefit was subsequently disallowed, leading to a proposed recovery of the cenvat credit along with interest and penalties.

During the proceedings, the appellant argued that the denial of the benefit under the said notification was erroneous, citing precedents from the Tribunal in similar cases. The Departmental Representative supported the orders issued against the appellants. After considering the arguments and examining the records, the Tribunal analyzed the applicability of the relevant notifications and rules.

The Tribunal observed that the Customs Notification applied to imported coal, while the Excise Notification was relevant to domestically manufactured goods. It was noted that the condition in the Excise Notification denying cenvat credit on coal imports by the supplier of coal was not applicable to imported coal under the Customs Notification. Rule 3 of the Cenvat Credit Rules, 2004, was also examined, clarifying that the restriction on availing cenvat credit did not extend to the Customs Notification in question. The Tribunal further referenced a Supreme Court decision emphasizing the distinction between domestically manufactured coal and imported coal regarding the application of relevant notifications.

Consequently, the Tribunal concluded that the adjudicating authority erred in denying the benefit of reduced CVD on imported coal based on the Excise notification meant for domestically manufactured goods. The order disallowing the benefit was deemed unsustainable and set aside, resulting in the allowance of the appeal in favor of the appellants.