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TMI Blog2021 (9) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... RAL EXCISE ST., VADODARA [ 2018 (9) TMI 159 - CESTAT AHMEDABAD ] were examined by the Tribunal and after distinguishing the decision of the Gujarat High Court in LONSENKIRI CHEMICALS INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, VADODARA-I [ 2018 (9) TMI 1439 - GUJARAT HIGH COURT ], which decision had also subsequently been distinguished by the Tribunal in C.C.E. S.T.- Surat-I vs. M/s. Aarti Industries Limited [ 2019 (3) TMI 240 - CESTAT AHMEDABAD ], the Tribunal concluded that if additional duty of Customs was paid after taking into consideration the Customs Notification dated March 17, 2012, there would be no bar for availment of CENVAT credit in terms of rule 3 (vii) of the Credit Rules. In view of the decision of the Tribunal in the appellant s own case [ 2020 (10) TMI 1032 - CESTAT NEW DELHI ], it has to be held that the Commissioner committed an illegality in disallowing CENVAT Credit of 1%/2% CVD paid on the imported coal under the Customs Notification No. 12/2012-Cus dated March 17, 2012, as amended on by Notification dated March 1, 2016. The Commissioner has also taken into consideration the fact that for the Financial Year 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The appellant, during the relevant period, paid CVD in terms of section 3(1) of the Customs Tariff Act on the importation of steam coal. The applicable entries, as amended under the Excise Notification No. 12/2012-CE dated March 17, 2012 and the Customs Notification No.12/2012-Cus dated March 17, 2012, in terms of which CVD was paid, are as follows: Period Rate of CVD Paid Under Entry No. Notification April 2012 to February 2013 1% 67 Notification No. 12/2012-CE, dated 17.03.2012 1% 123 Notification No. 12/2012-Cus. dated 17.03.2012 March 2013 to February 2016 2% 122A/123 Notification No.12/2012-Cus. dated 17.03.2012 as amended by Notification No. 12/2013-Cus. dated 01.03.2013 March 2016 to June 2017 2% 121B Notification No.12/2012-Cus. dated 17.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallow CENVAT credit to the respective units of the appellant for the relevant period and for recovery of the same with interest. The show cause notices were issued on the allegation that for the Financial Years 2012-13, CVD was paid on imported steam coal under Serial No.67 of the Central Excise Notification No. 12/2012-CE. Therefore, in terms of proviso to rule 3(i) of Credit Rules, CENVAT credit was not permissible for such CVD paid. For the period from Financial Years 2013-14 to June 20147, CVD was paid in terms of Serial No.122A/123 of Customs Notification No. 12/2012-Cus. It was alleged that CVD paid @2% was not a duty of excise as specified in the Excise Tariff Act and therefore, CENVAT credit of CVD paid under the Customs Notification No. 12/2012-Cus had been wrongly availed by the appellant. The extended period of limitation was also invoked in the show cause notices. 9. Replies were submitted by the appellant against each of the show cause notices. All the five show cause notices were adjudicated upon by the Commissioner by a common order dated 26.02.2019. The demands made in the show cause notices were confirmed in entirety for the following reasons: a. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ENVAT Credit Demand (in Rs.) 5,32,24,752/- 23,47,64,043/- 7,83,55,643/- 10,24,52,194/- 4,59,31,082/- Penalty (in Rs.) 5,32,24,752/- 23,47,64,043/- 70,00,000/- 10,24,52,194/- 40,00,000/- Period of dispute April 2012 to June 2016 April 2012 to June 2016 July 2016 to June 2017 April 2012 to July 2016 Aug 2016 to June 2017 11. Shri B.L. Narasimhan, learned counsel appearing for the appellant made the following submissions: (i) CENVAT credit of CVD paid @ 1% / 2% ad valorem has been correctly availed in terms of rule 3(1) (vii) of the Credit Rules. The present case is squarely covered by various decisions of Hon ble Tribunal, including appellant s own case for subsequent period, in Hindustan Zinc Ltd. vs. The Commissioner, Central Goods and Service Tax Commissionate [ 2020 (10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e First Schedule to the Excise Tariff Act, leviable under the Excise Act. Further, the proviso to the said rule provides that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods specified in serial number 67 in respect of which the benefit of an exemption under Notification No. 12/2012-C.E., dated March 17, 2012 is availed. It may the noted that serial number 67 relates to coal falling under heading 2701 with a rate of 1%. Thus, the downstream buyers of coal which is manufactured and cleared by availing of the benefit of exemption under Serial No. 67 of the Notification No. 12/2012-CE cannot take credit of such 1% excise duty paid. CENVAT credit cannot be taken on domestically produced coal, cleared at concessional rate of 2% by virtue of this proviso; (v) The instant case is covered by the decision of Gujarat High Court in Lonsenkiri Chemicals Industries vs. Commissioner of Central Excise Customs and Service Tax, Vadodara-I [ 2018 (9) TMI 1439- Gujarat High Court ] . 13. The submissions advanced by the learned Counsel appearing for the appellant and the learned Authorised Representative appearing for the Department have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v), (vi) and (via). 16. The Commissioner has mixed up rule 3(1)(i) and rule 3(1)(vii) of rule 3 of the Credit Rules. It is for this reason that the conditions specified in rule 3(1)(i) have also been imported into rule 3 (1)(vii) of the Credit Rules. In the first instance, Hindustan Zinc had not paid duty of excise specified in the First Schedule of the Excise Tariff Act, nor it had availed the benefit of the Central Excise Notification dated March 1, 2011 or that specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Central Excise Notification dated March 17, 2012 had been availed. In fact, Hindustan Zinc had paid additional duty of customs by availing the benefit under serial number 122A/123 of the Customs Notification dated March 17, 2012. It is because of this misreading of rule 3(1) of the Credit Rules that led the Commissioner to commit an error. 17. It needs to be noted at this stage that with regard to the period from April 2012 to February 2013, though the appellant had paid CVD in terms of Excise Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere would be no bar for availment of CENVAT credit in terms of rule 3(vii) of the Credit Rules. The relevant paragraph of the decision is reproduced below: 5 On careful consideration of the submissions made by both the sides, I find that the sole reason to deny Cenvat credit to the appellant is that the authorities below has taken into consideration Notification No. 12/2012-CE., dated 17-3-2012. The authorities below have not considering the Notification No. 12/2012-Cus., dated 17-3-2012. If same is taken into consideration and duty paid under the said notification, there is no bar for availment of cenvat credit in terms of Rule 3 (vii) of Cenvat Credit Rules, 2004. Therefore, I hold that authorities below has applied wrong provision to deny Cenvat credit to the appellant. Therefore, Cenvat credit cannot be denied to the appellant. In that circumstances, I hold that the appellant has correctly availed the Cenvat credit of CVD paid on imported coal in terms of Rule 3(7) of Cenvat Credit Rules, 2004. Further, I find that the show cause notice has been issued by invoking extended period of limitation. As the Revenue itself has applied wrong provisions of law, therefore, the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been taken the basis in the order-in-original, shall therefore be applicable for domestically manufactured goods only and not on the imported coal. Perusal of Excise Notification No. 67 further reveals that no such condition is applicable in case of import of coal. 8. The narrow compass of the adjudication, therefore, remains as to whether under Customs notification against S. No. 67 i.e., while importing the coal, the appellants were entitled to avail the Cenvat credit on the amount of CVD paid. The Cenvat credit is applicable as per Rule 3(1) of the Cenvat Credit Rules, 2004. Clause 7 thereof entitles the appellants to avail the Cenvat credit in the given circumstances. The said Rule itself clarifies that the Cenvat credit of duty of excise is not allowed to be taken when paid on any goods specified under S. Nos. 67 and 128 of Excise Notification No. 12/2012, dated 17-3-2012. Admittedly, the notification relied upon by the department for denying the impugned benefit to the appellant is Customs Notification No. 12/2012, dated 17- 3-2012. The restriction of Rule 3 is not applicable to the said notification. Above all, the Hon ble Supreme Court in the case of SRF Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id additional duty of customs in terms of section 3(1) of the Customs Tariff Act on the importation of steam coal. It was stated that for payment of such additional duty of customs, the benefit under serial number 122 A/123 (serial number 121B w.e.f March 1, 2006) of the Customs Notification No. 12/2012-Cus dated March 17, 20128, which prescribed a rate of 2% ad valorem, was availed. Hindustan Zinc also availed CENVAT credit of the additional customs duty so paid under rule 3(1)(vii) of the Credit Rules. However, a show cause notice dated July 8, 2019 was issued to Hindustan Zinc proposing to disallow CENVAT credit of ₹ 2,75,97,106/- for the relevant period from July 2016 to June 2017 and for recovery of the same with interest. The reason mentioned in the show cause notice was that CENVAT credit of duty specified in the First Schedule to the Excise Tariff Act was admissible under rule 3 of the Credit Rules and so additional duty of customs equal to duty of excise leviable under the Excise Tariff Act read with any other notification was admissible for CENVAT credit. As the additional duty of customs paid at the rate of 2% was not the duty of excise as specified under the Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % CVD paid on the imported coal under the Customs Notification No. 12/2012-Cus dated March 17, 2012, as amended on by Notification dated March 1, 2016. 26. There is one further aspect that needs to be examined. The Commissioner has also taken into consideration the fact that for the Financial Year 2012-13, the appellant had paid duty under the Excise Notification because of which credit was not admissible. 27. The appellant has stated that though the appellant had taken CENVAT credit of CVD paid in terms of the Excise Notification, but the appellant subsequently suo moto partially reversed CENVAT credit and with respect to the balance CENVAT credit of 1% CVD paid, the appellant paid additional CVD at the rate of 5% under protest but availed CENVAT credit of only 1% of CVD paid. Though this fact was pointed out by the appellant, but the Commissioner failed to consider this aspect. 28. Another reason stated by the Commissioner is that the appellant had filed a First Information Report from which it was evident that there was short receipt of imported coal and also that the coal actually received was of inferior quality. Thus, CENVAT credit calculated in this regard to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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