2024 (8) TMI 654 - AT - Central Excise

Wrongful availment of cenvat credit on Bills of Entry for which duty was paid by them under protest - Department was of the view that appellant is not eligible to avail credit as the Bill of Entry is only provisionally assessed and is yet to be finalized - extended period of limitation - suppression of facts or not. Eligibility to avail credit when the duty is paid during provisional assessment under protest - HELD THAT - The Customs Act, 1962 for payment of duty under protest as well as for provisional assessment. Rule 9 (1) of CCR 2004 specifically does not bar the availment of credit even if duty is paid during provisional assessment. There is no mention in the provision restricting the availment of credit when duty is paid under protest. The Tribunal in the case of Monarch Catalyst Pvt. Ltd. 2011 (11) TMI 185 - CESTAT, MUMBAI held that the credit is eligible even if the assessment is provisional. Thus, there are no grounds for disallowing credit. The appellant is eligible to avail credit. The issue on merits is found in favour of the appellant. Time limitation - suppression of facts or not - HELD THAT - There is no allegation that the appellant has suppressed facts with intent to evade payment of duty. The words used in the show cause notice is that the appellant has wrongly taken the cenvat credit on the basis of challans for which duty was paid under protest. The fact of paying duty under protest was well within the knowledge of the Department in 2016 itself. The credit has been availed on 30.09.2016. However, the show cause notice has been issued much later only on 30.07.2019 invoking the extended period - the Department has failed to establish grounds for invoking the extended period. The issue of limitation is answered in favour of the appellant. The impugned order is set aside - Appeal allowed.

Issues Involved:
1. Eligibility to avail Cenvat credit during provisional assessment.
2. Applicability of extended period for issuing show cause notice.

Issue-wise Detailed Analysis:

1. Eligibility to avail Cenvat credit during provisional assessment:

The main issue to be decided was whether the appellant is eligible to avail credit when the duty is paid during provisional assessment under protest. The appellant had imported iron ore and classified them under CETH 2601 for which the applicable CVD was NIL. The Department objected to the classification, asserting that the imported goods are iron ore concentrates and would attract CVD @ 12%. Consequently, the appellant paid the duty under protest and sought to avail Cenvat credit.

The Tribunal referred to Rule 9(1) of the Cenvat Credit Rules, 2004, which does not bar the availment of credit even if duty is paid during provisional assessment. The Tribunal also relied on several precedents, including the case of Monarch Catalyst Pvt. Ltd. Vs CCE Thane-I, where it was held that credit is eligible even if the assessment is provisional. The Tribunal emphasized that under Rule 9(1) of the Cenvat Credit Rules, the main document mentioned for availing credit is the "Bill of Entry," and it does not specify whether the Bill of Entry should be provisionally or finally assessed. The Customs Act, 1962, also supports this view by including provisional assessment under the definition of assessment.

Further, similar views were upheld in cases like Hindalco Industries Ltd. and Jayaswals NECO Limited, where it was concluded that the credit is admissible even if the duty is paid under protest or during provisional assessment. The Tribunal concluded that there are no grounds for disallowing credit and held that the appellant is eligible to avail credit.

2. Applicability of extended period for issuing show cause notice:

The appellant argued that the show cause notice issued on 30.07.2019 was beyond the normal period and that there was no suppression of facts to justify the invocation of the extended period. The appellant had availed the credit on 30.09.2016, and the Department was well aware of the payment of duty under protest in 2016 itself, as evidenced by a letter from the Department dated 01.07.2016.

The Tribunal noted that the show cause notice did not allege suppression of facts with intent to evade payment of duty. The fact that the duty was paid under protest was within the knowledge of the Department. Therefore, the Tribunal found that the Department failed to establish grounds for invoking the extended period. The issue of limitation was answered in favor of the appellant.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal with consequential relief if any. The Tribunal held that the appellant is eligible to avail Cenvat credit even if the duty is paid during provisional assessment under protest and that the extended period for issuing the show cause notice was not applicable in this case.

← Previous Next →