2019 (5) TMI 1180 - AT - Central Excise

CENVAT credit of the CVD part of the differential duty - benefit of Concessional rate of duty of BCD and CVD under N/N. 12/2012-Cus dated 17.03.2012 - Import of Bituminous coal in the guise of Steam coal - re-assessment of the Bill of Entry - Applicability of provisions of Rule 9 (1) (b) and Rule 3 of the CCR, 2004 - HELD THAT - The appellants have imported the coal as steam coal since 2004 but an investigation was conducted after an Alert Circular was issued by DRI alleging that the appellants are importing Bituminous coal in the guise of Steam coal in order to avail benefit of concession rate of duty under Notification No.12/2012-Cus dated 17.03.2012. Though, the appellants are disputing classification as adopted by the Customs but in the meantime, they have paid the differential duty of ₹ 48,73,556/- and availed CENVAT credit of ₹ 24,44,987/- of the CVD part of the differential duty. I find that this is a case of re-assessment of the Bill of Entry and the appellant is entitled to CENVAT credit of duty paid on the imported goods. Further, I find that Rule 9 (1) (b) of CCR are not applicable to the instant case because in the present case CENVAT credit is availed on re-assessment of the Bill of Entry. Further, I find that in the present case, there is no suppression on the part of the appellant with intent to evade payment of duty because the appellants have declared all the particulars at the time of availing the Bill of Entry which were considered by the Customs and thereafter the goods were released. In the case of M/S ESSAR OIL LTD. VERSUS CCE RAJKOT 2014 (2) TMI 766 - CESTAT AHMEDABAD the Tribunal has held that when additional duty is paid under re-assessment or on being pointed out by the Revenue then the credit of such duty paid will be admissible as CENVAT credit to the assessee under Rule 9 (1) (c) of the CCR, 2004. find that the ratio of the decision in the case of Coastal Energy Pvt. Ltd. 2014 (8) TMI 246 - CESTAT BANGALORE wherein the Tribunal has held that when the issue relates to classification of the imported goods and is technical in nature then mens-rea could not be alleged and extended period could not be invoked and no penalty can be imposed u/s 129B of the Customs Act, 1962 In view of my discussion above, I am of the considered view that the impugned orders are not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of appeals by Commissioner (Appeals) regarding differential duty and CENVAT credit availed by the appellants.

Analysis:
1. The appellants, engaged in the manufacture of Sponge Iron, were investigated for importing Bituminous coal as Steam coal to avail duty benefits. The Department issued a Show Cause Notice (SCN) proposing reclassification and demanding differential duty. The appellants voluntarily paid the duty and claimed CENVAT credit. Subsequently, a second SCN was issued demanding recovery of CENVAT credit with interest and penalty under Rule 14 of CCR, 2004. The Deputy Commissioner disallowed the credit and imposed penalties, leading to the appeal.

2. The appellants argued that the impugned order failed to consider their submissions and misinterpreted Rule 9 (1) (b) of CCR, 2004 regarding availing credit on re-assessment. They contended that the credit availed was legitimate as there was no suppression or fraud. They cited precedents supporting their position, emphasizing the admissibility of credit on duty paid under re-assessment.

3. The Department defended the impugned order, asserting the ineligibility of CENVAT credit post-offence detection. However, the Tribunal found that the appellants had imported coal as Steam coal for years before the investigation. The Tribunal noted that the case involved a re-assessment situation, entitling the appellants to the CENVAT credit of duty paid on imported goods.

4. The Tribunal ruled that Rule 9 (1) (b) of CCR was not applicable as the credit was based on re-assessment, not sales transactions. It also found no suppression by the appellants to evade duty payment, as all details were declared during import clearance. Citing the Essar Oil Ltd. case, the Tribunal held that credit on duty paid under re-assessment is admissible under Rule 9 (1) (c) of CCR. Additionally, following the Coastal Energy Pvt. Ltd. case, the Tribunal concluded that no penalty could be imposed under Section 129B of the Customs Act, 1962 in the absence of mens-rea for duty evasion.

5. Consequently, the Tribunal set aside the impugned orders, allowing the appeals of the appellants with any necessary consequential relief. The decision was pronounced in Open Court on 17/05/2019.