2021 (12) TMI 956 - AT - Central Excise

CENVAT Credit - Coal - CVD/excise duty at the rate of 1%/2% - Notice proceeds on the basis that if Cenvat credit of Central Excise Duty on coal cleared at the concessional rate of 1% under Notification No. 1/2011-CE dated 1 March 2011 as amended vide Notification No. 12/2011-CE dated 17 March 2012 was not available to the user then the credit of CVD on imported coal cleared at the rate of 1%/2% also should not be available as CVD is only aimed at counter balancing excise duty. HELD THAT - There is no restriction in these notifications unlike Sl. No. 67 of Central Excise Notification No. 12/2012 dated 17 March 2012 in so far as the availment of Cenvat credit on coal is concerned. The credit of CVD is available under Rule 3(1)(vii) of the CCR and the proviso to Rule 3(1)(i) restricting credit in case of coal cleared under Excise Notification No. 12/2012 dated 17 March 2012 cannot impliedly be read into when the rate of CVD has not been borrowed from the excise notification but has a generally applied rate on its own. There is considerable merit in the contention of the Appellant that there is no room for any intendment in taxing statutes which deserves a strict interpretation. Even otherwise generally applied rate of CVD (1% upto 28 February 2013 and 2% thereafter under the Customs notification) and the concessional excise duty rate on domestically manufactured goods (1% all throughout without Cenvat under the excise notification) were not uniform and in any event, the expression equivalent appearing in Rule 3(1)(vii) of the CCR for quantification of CVD could not be restricted ignoring the tariff rate of excise duty of 6% on domestically manufactured coal. Identical issue decided in the case of JAYPEE SIDHI CEMENT PLANT VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS AND EXCISE, JABALPUR 2019 (7) TMI 250 - CESTAT NEW DELHI where it was held that the adjudicating authority has committed a legal error while denying the benefit of reduced CVD on imported coal while placing reliance upon the Excise notification for manufacture of coal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat credit on coal subject to CVD/excise duty at the rate of 1%/2%.

Analysis:
The appeal challenged the rejection of Cenvat credit on coal under CVD/excise duty. The Appellant, a manufacturer of Iron and Steel articles, utilized steam coal as an input under the Cenvat Credit Scheme. The dispute arose from a Show-cause Notice alleging irregular availment of Cenvat credit on coal subject to CVD/excise duty during the relevant period. The authorities contended that if no credit of excise duty at the concessional rate of 1% was available, the credit of CVD at 1%/2% should also be restricted. The Appellant argued that the CVD was paid under Customs notifications, not excise notifications, and cited precedents supporting their position.

The Appellant contended that the CVD rate on imported steam coal was 1% without conditions, and the CVD was not quantified under excise notifications. They highlighted that the credit was availed only on imported coal cleared under specific Customs notifications, not on domestically manufactured coal. The Appellant also argued against restricting the CVD credit based on the excise duty provisions.

The Tribunal analyzed the issue and found that the Cenvat credit of CVD on imported coal was admissible under Customs notifications without restrictions. They emphasized that the CVD rate was not borrowed from excise notifications and required strict interpretation. The Tribunal cited precedents supporting the Appellant's position and set aside the Order-in-Appeal based on legal errors in denying the CVD benefit on imported coal.

In conclusion, the Tribunal allowed the appeal, granting the Appellant consequential relief. The decision was based on the admissibility of Cenvat credit on imported coal under Customs notifications, emphasizing the lack of restrictions compared to excise duty provisions. The judgment aligned with previous decisions and upheld the Appellant's argument regarding the CVD credit entitlement.

This detailed analysis of the judgment highlights the legal intricacies surrounding the admissibility of Cenvat credit on coal subject to CVD/excise duty, emphasizing the interpretation of Customs and excise notifications and the precedents supporting the Appellant's position.