2025 (1) TMI 526 - AT - Central Excise

Cenvat Credit of 2% countervailing duty paid on imported coal - Rule 3(1) of Cenvat Credit Rules, 2004 - HELD THAT - Reliance placed in the case of COMMISSIONER OF CGST AND CX, BOLPUR COMMISSIONERATE VERSUS M/S. SHYAM STEEL INDUSTRIES LIMITED 2022 (9) TMI 230 - CALCUTTA HIGH COURT wherein the Hon ble High Court has observed 'taking into consideration Notification No. 12/2012-Cus there is no bar for availment of CENVAT Credit in terms of the Rule 3(7) where duty paid under Notification No. 12/2012-Cus and CENVAT Credit cannot be denied.' Conclusion - The appellant is entitled to Cenvat Credit of 2% CVD paid by them at the time of import of the goods. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issue in this case is whether the appellant is eligible to avail Cenvat Credit for the 2% countervailing duty (CVD) paid on imported coal under Rule 3(1) of the Cenvat Credit Rules, 2004. This involves determining if there are any restrictions on availing such credit as per the relevant notifications and legal provisions.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around Rule 3(1) of the Cenvat Credit Rules, 2004, which allows manufacturers or service providers to take credit for duties paid, including CVD. The notifications in question are Notification No. 12/2012-Cus dated 17.03.2012 and Notification No. 12/2013-Cus dated 01.03.2013, which specify conditions under which CVD can be availed.

The case references include decisions from the Hon'ble Calcutta High Court in Commissioner of CGST and CX, Bolpur Commissionerate vs. M/s Shyam Steel Industries Ltd., and the tribunal's decisions in Hindalco Industries Limited vs. GST, Bhopal, among others.

Court's Interpretation and Reasoning

The court analyzed whether the CVD paid on imported coal could be equated to excise duty, thereby allowing for Cenvat Credit. The interpretation hinged on whether the notifications imposed any restrictions on availing Cenvat Credit for CVD, particularly when the duty is paid at a concessional rate.

Key Evidence and Findings

The court relied on the precedent set by previous tribunal and High Court decisions, which clarified that no restrictions were imposed by the notifications on availing Cenvat Credit for CVD paid at concessional rates. The tribunal noted the absence of specific conditions in the notifications that would prevent the credit from being availed.

Application of Law to Facts

The court applied Rule 3(1) of the Cenvat Credit Rules, 2004, and the relevant notifications to the facts, concluding that the appellant was entitled to claim the Cenvat Credit for the 2% CVD paid on imported coal. The decision was supported by consistent interpretations from various judicial bodies that emphasized the absence of restrictions in the notifications.

Treatment of Competing Arguments

The revenue argued that the CVD should be treated equivalently to excise duty, which would impose restrictions as per the notifications. However, the court rejected this argument, emphasizing a strict interpretation of taxing statutes and noting that the notifications did not explicitly restrict the credit for CVD.

Conclusions

The court concluded that the appellant is entitled to avail Cenvat Credit for the 2% CVD paid on imported coal, as there are no restrictions in the relevant notifications that would preclude such credit.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The tribunal stated, "there is no room for any intendment in taxing statutes and they require strict interpretation." This emphasizes the principle that any ambiguity in tax laws should be resolved in favor of the taxpayer.

Core Principles Established

The judgment reinforces the principle that CVD is equivalent to excise duty for the purpose of availing Cenvat Credit, provided there are no explicit restrictions in the governing notifications. It also underscores the necessity of strict interpretation of tax statutes.

Final Determinations on Each Issue

The tribunal set aside the impugned order and allowed the appeal, affirming that the appellant is entitled to Cenvat Credit for the 2% CVD paid on imported coal. The decision was based on established judicial precedents and a strict interpretation of the relevant legal framework.