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2023 (10) TMI 314 - AT - Central ExciseMethod of calculation for availing CENVAT Credit - purchase of inputs from EOUs and availed full credit of CENVAT, as per the invoices - supplier EOUs did not avail the benefit of Notification No. 23/2003 dated 31.03.2003 - whether the method of calculation, for availing CENVAT Credit, adopted by the appellants, by taking into account the Tariff Rate of basic Customs Duty is correct? - extended period of limitation. HELD THAT - The learned Commissioner (appeals) observes that though the appellants have applied the formula given under Rule 3(7)(a) of the CENVAT Credit Rule, taking into account Tariff Rate of BCD is not correct; CENVAT Credit is to be calculated by taking into account the basic Customs duty leviable and charged. We find that the appellants rely upon Tribunal s orders, by this bench in M/S SUN PHARMA LABORATORIES LTD VERSUS. CCE ST, JAMMU KASHMIR 2018 (12) TMI 1983 - CESTAT CHANDIGARH and CESTAT Ahmedabad in SUN PHARMACEUTICAL INDUSTRIES LTD VERSUS C.C.E. S.T. SURAT-II 2023 (4) TMI 710 - CESTAT AHMEDABAD . For the purpose of allowing the Cenvat credit, both the additional duties have to be taken into account and restricting the benefit to only one additional duty is not warranted under the strict interpretation principle of statutory interpretation. Further, CENVAT is as beneficial provision for reducing the cascading effect of taxation and if the object of CENVAT has to be subserved, the credit should be made available in respect of both the additional duty of customs. The economic rationale for the same has already been explained in the preceding paragraph. The basic issue that is under dispute is as to whether the appellant requires to take credit of duty at the tariff rate or at the effective rate. The cases relied upon by the Department as well as the appellant are not exactly on the issue. In the case of Micropure Parental Pvt. Ltd. 2015 (10) TMI 1919 - CESTAT MUMBAI , it was held that it is very clear that the term BCD in the second proviso implies the basic customs duty applicable on the goods by a normal importer from abroad. In the case of Venkateshwara Precision Components 2010 (8) TMI 243 - CESTAT, CHENNAI , it was held that with effect from 01.03.2005, if the inputs were imported, the manufacture would be eligible for CENVAT credit of duties paid under Section 3(1) and Section 3(5) of the Customs Tariff Act, 1975; under the circumstances, there is no warrant to treat the terms CVD referred to in Rule 3(7) of the CENVAT Credit Rules as applicable only to additional duty leviable under Section 3(1) of the Customs Tariff Act; additional duty levied under Section 3(5) has also been made eligible for credit. In view of the factual position, it appears that the contention raised by the appellants is not discussed in the above cited cases. The answer to the issue raised in the impugned case is answered by the facts of the case alone and is not a legal issue to be decided. Extended period of Limitation - HELD THAT - The Department has not brought anything on record to substantiate the allegation of suppression etc. to enable invocation of extended period. Commissioner (Appeals) set aside the penalty and has also not given any specific findings on the invocation of the extended period. In the facts and circumstances of the case, the extended period cannot be invoked. The appeal is allowed on limitation by holding that the impugned order is sustainable for the normal period.
Issues involved:
The issues involved in the judgment are the correct method of calculation for availing CENVAT Credit, the applicability of the formula under Rule 3(7)(a) of the CENVAT Credit Rules, and the imposition of penalty and invocation of the extended period. Correct method of calculation for availing CENVAT Credit: The case revolved around whether the method of calculation adopted by the appellant, considering the Tariff Rate of basic Customs Duty, was correct. The Commissioner (Appeals) held that the calculation should take into account the basic Customs duty leviable and charged, not just the Tariff Rate. The appellant argued that CENVAT Credit should be allowed as per the formula under Rule 3(7)(a) of the CENVAT Credit Rules. The Tribunal referred to previous decisions supporting the appellant's position but ultimately upheld the Commissioner's decision, stating that the CENVAT credit should be calculated based on the actual duty leviable and charged. Applicability of the formula under Rule 3(7)(a) of the CENVAT Credit Rules: The appellant contended that the excess credit availed was due to a change in the concessional rate of duty under Notification No. 23/2003, which was later amended. They argued that the excess credit was correctly taken during the relevant period. The Tribunal considered various precedents and legal interpretations but ultimately sided with the Commissioner, stating that the calculation of CENVAT Credit should be based on the duty actually leviable and charged. The Tribunal found that the appellant's argument was not acceptable in this regard. Imposition of penalty and invocation of the extended period: The Department sought to impose a penalty and invoke the extended period based on an audit objection. However, the Tribunal found that the Department failed to provide sufficient evidence to support the allegations of suppression, leading to the conclusion that the extended period could not be invoked. The Commissioner (Appeals) had set aside the penalty, and the Tribunal upheld this decision, emphasizing that the extended period was not justified in this case. Final Decision: The Tribunal allowed the appeal on the grounds of limitation, holding that the impugned order was sustainable for the normal period. The judgment was pronounced on 08/09/2023.
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