2024 (9) TMI 949 - HC - Customs

Benefit of adjustment of Countervailing Duty (CVD) against Duty Entitlement Pass Book (DEPB) scrips - time limitation - HELD THAT - This issue is no longer res integra as it has been considered and decided in favour of the assessee in the case of COMMISSIONER OF CENTRAL EXCISE, SPIC LIMITED (PHARMACEUTICAL DIVISION) VERSUS M/S. SPIC HEAVY CHEMICALS DIVISION, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 2013 (9) TMI 93 - MADRAS HIGH COURT . The duty on imports in that case had also been paid by way of debit to DEPB scrips and the question of law that was decided was whether such debit was correct in light of Notification 34/97 Customs dated 07.04.97 and the provisions of Cenvat Credit Rules, 2002. The stipulations under Notification dated 03.04.97 cannot under any circumstances be held to be a limitation for the purpose of claim of MODVAT. There does not appear to be anything available to show that this decision has been reversed in appeal. Hence, and applying the ratio of the decision of this Court in the case of SPIC Ltd., the direction of the writ court in granting refund of a sum of Rs. 28,42,745/- paid in cash by the petitioner on 19.07.1999 is confirmed. The question of re-credit to the DEPB scrips does not arise as the scrip has itself expired. Time Limitation - HELD THAT - The petitioner had remitted the duty in cash on 19.07.1999 and the claim for re-credit has been made on 27.8.99 within a period of six months from the day of payment as aforesaid. The application has thus been made within the period of limitation as stipulated under Section 27 of the Act. The order of the writ court dated 03.08.2010 is confirmed - appeal dismissed.

Summary

Issues:
- Adjustment of Countervailing Duty (CVD) against Duty Entitlement Pass Book (DEPB) scrips
- Application for re-credit of duty rejected as barred by limitation
- Appeal against rejection of application
- Validity of refund of duty paid in cash
- Entitlement to MODVAT credit when duty paid through DEPB scrips
- Consideration of alternate statutory remedy before Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

Analysis:
1. The writ petitioner, engaged in perfume manufacturing, imported raw materials under 23 Bills of Entry and sought to adjust Countervailing Duty (CVD) against Duty Entitlement Pass Book (DEPB) scrips held. The ambiguity arose regarding eligibility for Modified Value Added Tax (MODVAT) credit if duty was paid through DEPB scrips.
2. The petitioner remitted duty again in cash on 19.7.1999 and applied for re-credit to DEPB scrips on 27.08.1999, which was rejected as barred by limitation under Section 27 of the Customs Act due to delay in application.
3. The first Appellate Authority upheld the rejection, leading to a writ petition challenging the order. The argument of availing alternate statutory remedy before CESTAT was raised but not considered due to the delay in raising the issue.
4. The writ court directed the Department to refund the duty paid in cash within the limitation period, but rejected re-credit to DEPB account as the scrip had expired, prompting the Department to appeal against the refund direction.
5. The issue of entitlement to MODVAT credit when duty was paid through DEPB scrips was settled in a previous case, confirming that availing credit by debit to DEPB is akin to cash payment for tax purposes, allowing MODVAT credit.
6. The court affirmed the refund direction based on the previous case's ratio, emphasizing that the Notification dated 03.04.97 did not limit MODVAT claim. The application for re-credit was within the limitation period, as clarified by the court.
7. Consequently, the court upheld the writ court's order, dismissing the appeal and directing refund within four weeks if not already done, without costs.