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TMI Blog2024 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... leging that the CENVAT credit availed on the duty component of Basic Customs Duty, Education Cess and Secondary Higher Education Cess of Rs.2,03,93,277/- paid on the iron ore by the 100% EOU as per Sl. No.4 of Notification No.23/2003 CE dt. 31.3.2003 being not admissible to the appellant, show-cause notice was issued on 14.3.2018 proposing recovery of the excess CENVAT credit of Rs.2,03,93,277/- availed during the said period along with interest and penalty. On adjudication, the demand was confirmed with interest and penalty and the duty paid has been appropriated. Hence, the present appeal. 3. At the outset, the learned advocate for the appellant has submitted that the suppliers who are 100% EOU units have cleared the Iron Ore in Domestic Tariff Area (DTA) on payment of Excise duty in terms of the proviso to Section 3(1) of the Central Excise Act, 1944 calculated in terms of Sl. No.4 of the Notification No.23/2003-CE dated 31.3.2003. The Iron Ore cleared by the Mining Lease Holders, including 100% EOUs, were sold through E-Auction conducted by the Monitoring Committee, constituted by the Supreme Court, for regulating and conducting the mining and sale of Iron Ore. The Iron Ore cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 3(1) of Central Excise Act, 1944 read with Sl. No.4 of the Notification No.23/2003-CE dated 31.03.2003, any restriction/condition or formulae for availing CENVAT credit has been prescribed. Thus, disallowing credit of Excise duty paid by 100% EOU considering it as if it a Customs duty, is contrary to the law and not sustainable. 4. To support of his contention, the duty paid by the 100% EOU is an Excise Duty and not Customs Duty, he has referred to judgment of the Hon'ble Supreme Court in the case of CCE & C vs. Suresh Syntehtic: 2017 (216) ELT 662 (SC). Further, the Larger Bench of the Tribunal in the case of Vikram Ispat vs. CCE: 2000 (120) ELT 800 (Tri.-LB), while examining the reference made with respect to admissibility of MODVAT credit of Excise duty paid on inputs in erstwhile Rule 57A of Central Excise Rules held that the nature of duty levied on the goods by an 100% EOU is an Excise duty only even though for determining the quantum of duty, the measure adopted is the duties leviable under the Customs Act, 1962. Further, he has referred to the judgments of this Tribunal in the case of Molex (India) Pvt. Ltd. vs. CCE: 2016 (341) ELT 463 (Tri.-Bang.); Gopala Polyp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng CENVAT credit is the main Rule i.e., Rule 3(1) of CENVAT Credit Rules, 2004. Under the said Rule 3, at best Clause (vii) would be applicable. In the present case, since the additional duty of customs leviable under Section 3 on Customs Tariff Act equivalent to the duty of Excise is 'nil', therefore, the CENVAT credit availed by the appellant is irregular, hence, recoverable. Since the appellant has availed inadmissible credit, therefore, the learned Commissioner has rightly confirmed the demand against the appellant. 7. Heard both sides and perused the records. The issues involved in the present appeal for determination are whether: (i) the appellants are eligible to avail the entire quantum of duty paid by an 100% EOU under the proviso to Section 3(1) of CEA,1944 read with Sl. No. 4 of Notification No.23/2003 CE dt.31.3.2003 on iron ore as credit under CENVAT Credit Rules, 2004 or the component of BCD and EC & SHEC considered in calculating duty under Notification No.23/2003CE dt.31.3.2003 be disallowed; and (ii) Whether the demand is barred by limitation. 8. The undisputed facts are that the appellant had availed total CENVAT credit of Rs.5,42,07,573/- i.e. the entire amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an Excise duty by the Larger Bench of the Tribunal in the case of Vikram Ispat vs. CCE, Mumbai (supra). 11. The duty payable by an 100% EOU as per Section 3(1) of Central Excise Act, 1944 is the aggregate duties of customs leviable under Customs Act, 1962. The said provision reads as follows: "[SECTION 3. Duty specified in the Fourth Schedule to be levied. - (1) There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the Fourth Schedule: Provided that the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred per cent. export-oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets was held to be valid by the Supreme Court holding that for the purpose of levying tax under Entry No. 49, List II of the Seventh Schedule to the Constitution, the State Legislature may adopt annual or capital value of the building and this will not make it a tax falling within the scope of Entry 86 of List I of the Seventh Schedule. Similar views were held by the Supreme Court in the case of Hingir - Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459 wherein it was held that the method in which the fee is recovered is a matter of convenience and by itself it cannot fix upon the levy the character of the duty of excise. In this case a fee was levied by the State of Orissa on the basis of 5% of the value of the minerals at the pits mouth. It was challenged that the CESS was in the nature of duty of excise. The Supreme Court did not agree with this contention holding that "it is difficult to appreciate how the method adopted by the Legislature in recovering the impost can alter its character........ In our opinion, the mere fact that the levy imposed by the impugned Act had adopted the method of determining the rate of levy by reference to the minerals produced by the mine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt notification issued under sub-section (1) of section 5A of the Central Excise Act : Provided further that nothing contained in the first proviso shall apply to the goods which are chargeable to "Nil" rate of duty leviable under section 12 of the Customs Act, 1962 read with any other notification for the time being in force issued under sub-section (1) of section 25 of the said Customs Act. Illustration.- Assuming product X has the value Rs. 100 under section 14 of the Customs Act, 1962 and is chargeable to basic custom duty of 25% ad valorem, additional duty of 16% ad valorem and special additional duty of 4% ad valorem. The computation of duty required to be paid would be as follows : Basic Customs duty = Rs. 25/- Value for the purpose of calculation of additional duty = Rs. 100/- + Rs. 25/- = Rs. 125/- Additional duty = 16% of Rs. 125/-= Rs. 20/- Value for the purpose of special additional duty if leviable = Rs. 100/- + Rs. 25/- + Rs. 20/- = Rs. 145/- special additional duty if leviable= 4% of Rs. 145/-= Rs. 5.8/- Total duty payable but for this exemption= Rs. 25/-+ Rs. 20/- + Rs. 5.80/-= Rs. 50.80/- 50% of aggregates of the duties of customs= 50% of Rs. 50.80/-= 25.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to any process In excess of amount equal to fifty per cent. of the aggregate duty, not reduced by any other notification : Provided that the fifty per cent. of the aggregate duty leviable on the goods shall be apportioned in the ratio 2:1 between the duty leviable under the Central Excise Tariff Act, 1985 (5 of 1986) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957). Explanation.- For removal of doubts, it is clarified that the value of the goods shall be determined in terms of the section 4 of the Central Excise Act. 5 7 60 (i) Knitted or crocheted fabrics of cotton, whether or not processed; (ii) Knitted or crocheted fabrics of man-made fibres, not subjected to any process, In excess of amount equal to fifty per cent. of the aggregate duty, not reduced by any other notification: Provided that the fifty per cent. of the aggregate duty leviable on the goods shall be apportioned in the ratio 2:1 between the duty leviable under the said Central Excise Tariff Act and the said Additional Duties of Excise (Goods of Special Importance) Act. Explanation. - For removal of doubts, it is clarified that the value of the goods shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present form. In that situation the proviso should have provided that the credit of specified duty shall be restricted to the extent of portion of excise duty which is equivalent to the additional duty of customs paid by the 100% E.O.U. The phrase "equivalent to the duties of excise specified under (i) & (ii) above paid on such inputs" refers to the payment of (a) duty of excise under the Central Excise Act and (b) additional duty of excise under the Additional Duties of Excise (Textiles and Textile Articles) Act. If the Additional Customs duty leviable on like goods includes any other excise duty, such as duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Modvat Credit will not be available in respect of such duty." 15. In the instant case, the department has adopted a wrong basis in denying a portion of the CENVAT credit to the appellant of the duty paid by 100% EOUs, on the ground that component of BCD and applicable EC & SHEC on the BCD adopted in computing aggregate duties of Customs, which is nothing but Excise duty being not mentioned in Rule 3(1) of CCR, 2004, hence, not admissible. The said reasoning adopted by the Learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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