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2018 (9) TMI 1439 - HC - Central ExciseCENVAT Credit - restriction on credit of duty paid availing the benefit of notification no 1 of 2011 - duty paid on import of coal - assessee claimed the duty paid at concessional rate cannot cannot be treated as duty of excise perse - proviso to rule 3(1) of CENVAT credit Rules, 2004 Held that - It is not in dispute that the assessee has availed of the benefit of exemption notification 1 of 2011 and also the benefits under Sr.No.67 and 128 of exemption notification 12 of 2012. In that view of the matter, the above noted proviso of the Rules, would disentitle the assessee from claiming CENVAT credit. The countervailing duty would not be included in the expression duty of excise for the purpose of the said rule - the assessee s very foundation of claiming the benefit of CENVAT credit would disappear. Penalty - Held that - The Appellate Authority had noted that correct facts were suppressed by the assessee from the department and the reversal of payment of duty was made only after it was pointed out by the audit - Penalty upheld. Appeal dismissed.
Issues:
1. Interpretation of CENVAT credit rules and exemption notifications. 2. Allowance of CENVAT credit on imported coal. 3. Application of penalty under Rule 15(2) of the CENVAT Credit Rules. Interpretation of CENVAT credit rules and exemption notifications: The Tax Appeal challenged the Customs Excise and Service Tax Appellate Tribunal's judgment regarding the interpretation of CENVAT credit rules and exemption notifications. The appellant imported coal subject to countervailing duty, but exemption notifications allowed for reduced or nil duty rates. The Tribunal held that the proviso to Rule 3(1) of the CENVAT Credit Rules disallowed CENVAT credit due to the benefits availed under the exemption notifications. The appellant contested this view, arguing that the proviso referred to "duty of excise," while the duty paid was countervailing duty. However, the Court held that the term "duty of excise" must have a consistent interpretation across the rule and proviso. Therefore, the appellant's claim for CENVAT credit was denied based on the proviso's restrictions. Allowance of CENVAT credit on imported coal: The issue revolved around the appellant's entitlement to claim CENVAT credit on imported coal. The appellant had availed benefits under specific exemption notifications, leading the Revenue authorities and Tribunal to reject the CENVAT credit claim based on the proviso to Rule 3(1) of the CENVAT Credit Rules. The Court emphasized that the term "duty of excise" must be uniformly interpreted, and since the appellant had benefited from the exemptions, CENVAT credit was not allowable. The appellant's argument that countervailing duty should not be considered "duty of excise" for the purpose of the rule was dismissed, upholding the authorities' decision to disallow the credit. Application of penalty under Rule 15(2) of the CENVAT Credit Rules: Regarding the penalty, the appellant contended that since CENVAT credit was not availed, the penalty should be deleted. However, it was noted that the appellant had suppressed correct facts from the department and reversed the duty payment only after an audit pointed it out. Consequently, the Court found no error in the authorities' decision to uphold the penalty under Rule 15(2) of the CENVAT Credit Rules. Ultimately, the Tax Appeal was dismissed, along with the Civil Application, affirming the lower authorities' views on the issues raised.
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