2024 (1) TMI 769 - AT - Central Excise

Validity of availing CENVAT credit of CVD paid on import of coal - Recovery/reversal of credit along with interest and equivalent penalty - credit in respect of CVD paid under notification no.12/2012-Cus. dated 17.03.2012, on import of coal - HELD THAT - Whereas the appellant have imported coal and CVD of 2% is leviable in terms of Customs notification no. 12/2012 Cus. dated 17.03.2012. There is no restriction provided in Rule 3 as regards duty paid under Customs notification. This restriction is applicable only in case of indigenous goods on which the excise duty at 2% was paid by availing notification no.12/2012-CE which is not the case here. Reference was made to the decision of the Supreme Court in M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI 2015 (4) TMI 561 - SUPREME COURT which had clarified that notification no.12/2012-CE is applicable only in respect of indigenously manufactured coal and not in respect of imported coal. Even if the importer wants to avail the exemption notification no.12/2012-CE for payment of CVD, the same will not be available to the importer and therefore in the case of import, the notification no.12/2012-CE is not relevant. The decision of the High Court of Gujarat in the case of Lonsenkiri Chemicals Industries 2018 (9) TMI 1439 - GUJARAT HIGH COURT has also been consistently found to be distinguishable for the reason, to quote from the decision of the Principal Bench of the Tribunal in Hindustan Zinc 2020 (10) TMI 1032 - CESTAT NEW DELHI , where it was held that The appellant therein had availed the benefit of serial numbers 67 and 128 of the Central Excise Notification dated March 17, 2012. It is for this reason that the High Court held that because of the condition set out in proviso (b) of rule 3(1)(i) of the CENVAT Credit Rules that the appellant would not be entitled to avail CENVAT credit. It is found from the aforesaid decisions that a consistent view has been taken by the various Benches on the provisions of Rule 3(1) and the distinction between the customs notification and the central excise notification. There is no reason to take any contrary view in the present case where the respondent has paid additional duty of customs under Section 3(1) of the Customs Tariff Act and availed the benefit of the Customs notification dated 17.03.2012 and also availed Cenvat Credit of the additional duty of Customs under Rule 3(1)(vii) of the Cenvat Credit Rules. The impugned order of the Commissioner (Appeals) upheld - The present appeal filed by the department, is accordingly dismissed.

Summary

Issues Involved:
1. Entitlement to credit in respect of CVD paid under notification no.12/2012-Cus on import of coal.
2. Applicability of Rule 3(1) of the Cenvat Credit Rules, 2004.
3. Distinction between customs notification and central excise notification.

Summary:

Entitlement to Credit in Respect of CVD Paid:
The primary issue in this appeal is whether the respondent is entitled to credit for CVD paid under notification no.12/2012-Cus dated 17.03.2012 on the import of coal. The Tribunal held that this issue is no longer res integra and has been consistently decided in favor of the assessee, as affirmed by the High Court of Calcutta in Commissioner of CGST & C. EX, Bolpur Commissionerate Vs. Shyam Steel Industries Ltd. - 2022 (382) ELT 329 (Cal).

Applicability of Rule 3(1) of the Cenvat Credit Rules, 2004:
The respondents, engaged in manufacturing cement and clinkers, were availing Cenvat credit on CVD paid on imported coal as per Rule 3(1) of the Cenvat Credit Rules, 2004. The department issued a show cause notice denying this credit and confirming its recovery with interest and penalty. However, the Commissioner (Appeals) allowed the respondents' appeal, which led to the department filing the present appeal before the Tribunal.

Distinction Between Customs Notification and Central Excise Notification:
The Tribunal noted that Rule 3(1)(vii) allows credit of additional duty leviable under Section 3 of the Customs Tariff Act. The Tribunal referred to the decision in Hindalco Industries Ltd Vs. GST, Bhopal, which clarified that the restriction on availing credit under notification no.12/2012-CE applies only to indigenously manufactured goods and not to imported goods. The Tribunal also cited other cases, including SRF Limited Vs. CC, Chennai, and decisions of various benches, which supported the respondents' entitlement to credit.

Conclusion:
The Tribunal upheld the impugned order of the Commissioner (Appeals), dismissing the department's appeal and allowing the respondents' cross-appeal. The Tribunal emphasized the consistent judicial view that Cenvat credit of CVD paid on imported coal under notification no.12/2012-Cus is admissible, distinguishing it from the central excise notification applicable to domestic goods. The Tribunal reiterated that the conditions under Rule 3(1)(i) do not apply to Rule 3(1)(vii), thus affirming the respondents' position.