2015 (7) TMI 315 - AT - Customs

Denial of CENVAT Credit - whether the appellants, who have paid the Additional Custom Duty through DEPB are entitled to avail the CENVAT credit of the same or not - Held that - Decision of the Larger Bench in the case of ESSAR Steel Ltd., 2004 (8) TMI 123 - CESTAT, NEW DELHI stands considered by Hon ble High Court of Madras and by order passed in the case of CCE, Chennai Vs. SPIC Ltd., it does not stand concurred with. It stands held by the Hon ble High Court that even when the duty stands paid under DEPB pass book entries, the assessee was eligible to claim the credit of the same. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues involved: Whether appellants who paid Additional Custom Duty through DEPB are entitled to avail CENVAT credit.

In the judgment by Hon'ble Mrs. Archana Wadhwa, the issue at hand was whether the appellants, who paid Additional Custom Duty through Duty Entitlement Pass Book (DEPB), were eligible to claim CENVAT credit for the same. The lower authorities had denied the credit based on the decision of the Larger Bench in the case of ESSAR Steel Ltd. vs. CCE, Visakhapatnam. However, the Hon'ble High Court of Madras, in the case of CCE, Chennai vs. SPIC Ltd., held that even if the duty was paid through DEPB passbook entries, the assessee could claim the credit. The tribunal found that the decision of the Larger Bench was not in line with the High Court's ruling. Consequently, the tribunal set aside the lower authorities' order and allowed the appeal in favor of the appellants, without considering the limitation issue raised by the appellants.

In a detailed analysis, the tribunal considered the conflicting decisions of the Larger Bench and the High Court. The tribunal noted that the lower authorities had relied on the ESSAR Steel Ltd. case to deny the CENVAT credit to the appellants. However, the tribunal pointed out that the High Court of Madras, in the SPIC Ltd. case, had taken a different stance, allowing the credit even for duty paid through DEPB passbook entries. The tribunal emphasized that the High Court's decision was not in agreement with the Larger Bench's ruling. As a result, the tribunal concluded that the appellants were indeed entitled to claim the CENVAT credit for the Additional Custom Duty paid through DEPB.

The tribunal's decision to set aside the lower authorities' order was based on the interpretation of the law regarding the eligibility of CENVAT credit in cases where duty was paid through DEPB. By highlighting the discrepancy between the decisions of the Larger Bench and the High Court, the tribunal clarified that the appellants had the right to avail the credit. The tribunal's ruling favored the appellants, allowing them to claim the CENVAT credit without being restricted by the interpretation followed by the lower authorities. The tribunal's decision was a significant victory for the appellants, as it aligned with the more favorable interpretation set forth by the High Court of Madras in similar cases.