Arihant Tradelinks India Personal Restricted Vs C.C.E., Kutch (Gandhidham) (CESTAT Ahmedabad)

Conclusion: In current info of the case, the Hon’ble Tribunal held that limitation interval couldn’t be invoked as the problem concerned is only of interpretation of Cenvat Credit score Guidelines, levy of CVD when it comes to Customs Tariff Act, subsequently malafide intention can’t be attributed to the appellant.

Details: The transient info of the case are that the appellants have availed Cenvat Credit score of CVD paid on enter particularly, coal of assorted sorts both instantly imported by the appellant or bought from different importers. The import paperwork in respect of such coal point out that CVD @ 2% was paid when it comes to Customs Notification No. 12/2012-Cus dated 17.03.2012 (as amended) and accordingly, appellants have paid CVD @ 2% and availed Cenvat credit score thereof. The appellants have been issued present trigger notices to disclaim credit score, because the appellant has not paid obligation on the Central Excise tariff charges and have paid obligation lower than that, as per Customs Notification No. 12/2012-Cus, appellant weren’t eligible for Cenvat credit score. The Adjudicating Authorities, vide impugned orders confirmed the demand of Cenvat credit score availed by the appellant and in addition imposed equal penalty. Due to this fact the current appeals filed by the appellants.

After bearing in mind of submissions from each side, the Hon’ble Tribunal noticed that particular bar was offered below Rule 3(1)(i)(a) and (b) for availing Cenvat credit score in respect of products exempted from fee of excise obligation below Notification No. 1/2011-CE and 12/2012-CE. Nevertheless, there isn’t any bar offered in respect of CVD paid below Customs Notification No. 12/2012-Cus. For that reason itself, the Cenvat credit score availed by the appellant in respect of CVD can’t be denied. Solely on the bottom that the appellant haven’t paid CVD equal to the excise obligation leviable on the Coal specified below clauses (i), (ii), (iii), (iv), (v), (vi) and (by way of) and utilized clause (vii) of Rule 3 of Cenvat Credit score Guidelines. The Income‟s rivalry is inaccurate that as per clause (vii) of Rule 3(1) further obligation leviable below Customs Tariff Act is equal to obligation of excise obligation specified below clause (i) of Rule 3(1) is paid.

As per clause (i) of Rule 3(1), the obligation of excise specified within the first schedule to the Central Excise Tariff Act, 1985 leviable below the Excise Act. Within the current case, there isn’t any dispute that the obligation of excise is certainly laid out in first schedule of Central Excise Tariff Act, 1985 which is leviable below the Excise Act. It’s only by Customs Notification, the concession in price of obligation was offered i.e. @ 2% below Notification No. 12/2012-Cus. Solely because the concessional price is offered below Customs Notification, the character of excise obligation specified within the first schedule to the Central Excise Tariff Act doesn’t get altered. The Adjudicating Authority has ignored the truth that there may be not the speed of CVD offered within the Customs Tariff Act and the speed of obligation is offered in Central Excise Tariff Act. Due to this fact, even the two% which is nothing however a concessional CVD in lieu of excise obligation and the identical is specified within the first schedule of Central Excise Tariff Act. Due to this fact, at any time when CVD is paid, it flows from the Central Excise Tariff Act and never from the Customs Tariff Act and isn’t as per the obligation specified within the Customs Tariff Act. Due to this fact, the whole foundation of the interpretation made by the Adjudicating Authority relating to levy of CVD is inaccurate and on that foundation, the case of the division doesn’t maintain.

On the problem of limitation, the Hon’ble Tribunal held that the problem concerned is only of interpretation of Cenvat Credit score Guidelines, levy of CVD when it comes to Customs Tariff Act. On this state of affairs, malafide intention can’t be attributed to the appellant. The appellant have been declaring availment of Cenvat credit score in respect of two% CVD and the identical have been mirrored in month-to-month ER-1 returns. Due to this fact, there may be completely no suppression of info or mis-declaration and many others. on the a part of the appellant. Accordingly, the demand for prolonged interval just isn’t sustainable on the bottom of time-bar additionally.

Accordingly, the attraction of the Appellants have been allowed.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

The transient info of the case are that the appellants have availed Cenvat credit score of CVD paid on enter particularly, coal of assorted sorts both instantly imported by the appellant or bought from different importers. The import paperwork in respect of such coal point out that CVD @ 2% was paid when it comes to Customs Notification No. 12/2012-Cus dated 17.03.2012 (as amended) and accordingly, appellants have paid CVD @ 2% and availed Cenvat credit score thereof. The appellants have been issued present trigger notices whereby it was contended that admissibility of Cenvat Credit score is ruled by the Cenvat Credit score Guidelines 2004. Rule 3(1) of Cenvat Credit score Guidelines, 2004 prescribes some particular varieties of duties, that are allowed to be eligible as Cenvat Credit score. The extra obligation of customs is an obligation equal to obligation of excise in the interim leviable on like article, if produced or manufactured in India. Clause (vii) of sub Rule (1) of Rule 3 of Cenvat Credit score Guidelines, 2004 permits availing Cenvat credit score of further obligation leviable below Part 3 of the Customs Tariff Act (generally referred to as CVD) topic to the situation that the CVD should be equal to the obligation of excise specified below clauses (i), (i), (i), (iv), (v), (vi) and (by way of) of the mentioned guidelines. The time period “equal” has higher significance that in any case, if the CVD paid just isn’t equal to the obligation of excise as specified below clauses (i), (i), (i), (iv). (v), (vi) and (by way of) of Rule 3(1) of Cenvat Credit score Guidelines, 2004, credit score thereof just isn’t allowed to the producer. It was additional contended within the present trigger notices that appellant is eligible for CVD credit score paid is similar which is the same as obligation of excise specified below Central Excise Tariff heading 2701 i.e. 5%/6% advert valorem as per Central Excise Tariff Act, 1985. For the reason that appellant has not paid obligation on the Central Excise tariff charges and have paid obligation lower than that, as per Customs Notification No. 12/2012-Cus, appellant should not eligible for Cenvat credit score. The Adjudicating Authorities, vide impugned orders confirmed the demand of Cenvat credit score availed by the appellant and in addition imposed equal penalty. Due to this fact the current appeals filed by the appellants.

2. Shri Hardik Modh, realized Counsel showing on behalf of the appellants submit that Part 3 of the Customs Tariff Act, 1975 levies obligation equal to the excise obligation, gross sales tax, native tax and different fees on the products imported into India to off-set the levy of the taxes on the products manufactured/ offered in India in order that the imported items are additionally at par in respect of the obligation levied on such items. He submits that mere perusal of Part 3(1) of Customs Tariff Act clearly reveals that Customs Tariff Act levies CVD which is barely of Central Excise regime. On the related time the imported items have been topic to excise obligation on the price of 6% as per first schedule Central Excise Tariff Act, 1975. The exemption which was a concessional exemption with efficient price of two% by Customs Notification No. 12/2012-Cus dated 17.03.2012. He submits that related entry below the Notification No. 12/2012-Cus is amended every now and then is an unconditional exemption and the appellant was eligible to avail the good thing about the concessional price of CVD on the price of two%. He additional submits that Rule 3 of Cenvat Credit score Guidelines, 2004 specifies duties which could be claimed as Cenvat credit score by a registered particular person. As regards the rivalry of the Income that credit score of CVD is offered solely when paid as per tariff charges, he submits that Central Authorities have powers to levy CVD totally different than the obligation of excise payable on like items manufactured to counter-balance excise obligation. The appellant had paid obligation at concessional price of two% by counting on the Notification No. 12/2012-Cus which refers Part 3(1) of the Customs Tariff Act and never Part 3(3) of the Customs Tariff Act. He submits that Rule 3(1) restricts the quantity paid below Notification No. 12/2012-CE and Notification No. 12/2012-CE issued below the Central Excise regime and never in respect of the notification issued below the Customs regime. Due to this fact, he submits that there isn’t any restriction in respect of CVD paid below Notification No. 12/2012-Cus. He submits that solely as a result of the speed of obligation is decreased doesn’t alter the character of the obligation levied on the products. Additional, Cenvat credit score was taken as per Rule 3(vii) of Cenvat Credit score Guidelines as CVD was levied as per Part 3(1) of Customs Tariff Act which is equal in nature of the excise obligation. The efficient price of obligation was additional decreased by the Notification No. 12/2012-Cus however the nature of the obligation was nonetheless offset the levy of Central Excise obligation. He submits that the problem is now not res-integra as numerous benches of the Tribunal, on the identical subject has allowed Cenvat credit score in respect of concessional CVD paid below Notification No. 12/2012-Cus

3. He additional submits that demand is clearly time-barred because the prolonged interval of limitation was invoked. The problem pertains to the interpretation of Cenvat provisions and Customs Tariff Act and for a similar subject, numerous circumstances have been booked by the division which is clear from the judgments given on the identical subject. Due to this fact, no malafide intention or suppression of info with intention to evade obligation is attributable to the appellants. The availment of Cenvat credit score having been declared within the month-to-month ER-1 returns, appellant haven’t mis-declared or suppressed any truth from the division. Due to this fact, the demand for the prolonged interval is clearly time-barred. In help of deserves of the case in addition to time-bar, he positioned reliance on the next judgments:-

(a) Hindalco Industries Restricted v/s. GST, Bhopal – 2018 (363) ELT 1085 (Tri-Delhi)

(b) Lonsenkiri Chemical compounds Industries vs. C.C.E, Cus & ST, Vadodara – 2019 (365) ELT 22 (Guj.)

(c) Commissioner vs. Meghmani Dyes & Intermediates Restricted – 2013 (288) ELT 514 (Guj.)

(d) Commissioner of CE vs. Pragathi Concrete Merchandise (P) Restricted – 2015 (322) ELT 819 (SC).

(e) Simplex Infrastructures Restricted vs. CST, Kolkata – 2016-TIOL-779-HC-KOL-ST

(f) Delhi Worldwide Airport Restricted vs. Commissioner of CGST – 2019 (24) GSTL 403 (Tri.)

(g) Binjrajka Metal Tubes Restricted vs. CCE – 2016 (342) ELT 302 (Tri.)

(h) CCE & ST, Surat vs. Aarti Industries Restricted – Remaining Order No. A/10390/2019 dated 22.02.2019

(i) Asahi Songwon Colours Restricted vs. Commissioner of Central Excise & ST., Vadodara – Remaining Order No. A/11585/2018 dated 09.07.2018

4. Alternatively, Shri Ghanshyam Soni, realized Joint Commissioner (AR) and Shri Vinod Lukose, realized Superintendent (AR) appeared on behalf of the appellants. They reiterates the findings of the impugned orders and in addition argued on the written submission filed on 15.07.2021. The Income additionally positioned reliance on the next judgments:-

(a) 2015 (318) ELT 3 (SC)- Aidek Tourism Companies P. Restricted vs. CC, New Delhi

(b) 2019 (365) ELT 22 (Guj) – Lonsenkiri Chemical compounds Industries vs. CCE, Vadodara-l

(c) 2002 (139) ELT 3 (SC) – CCE, Vadodara vs. Dhiren Chemical Industries.

(d) 2020 (36) GSTL 3 (SC) – State of Andhra Pradesh vs. Linde India Restricted

5. We’ve got rigorously thought-about the submissions made by each the edges and perused the report. We discover that appellant have availed Cenvat credit score in respect of two% CVD paid as per Notification No. 12/2012-Cus. Particular bar was offered below Rule 3(1)(i)(a) and (b) for availing Cenvat credit score in respect of products exempted from fee of excise obligation below Notification No. 1/2011-CE and 12/2012-CE. Nevertheless, there isn’t any bar offered in respect of CVD paid below Customs Notification No. 12/2012-Cus. For that reason itself, the Cenvat credit score availed by the appellant in respect of CVD can’t be denied. We discover that Income has disallowed Cenvat credit score to the appellants in respect of CVD paid on imported Coal on the price of two% when it comes to Notification No. 12/2012-Cus dated 17.03.2012. Solely on the bottom that the appellant haven’t paid CVD equal to the excise obligation leviable on the Coal specified below clauses (i), (ii), (iii), (iv), (v), (vi) and (by way of) and utilized clause (vii) of Rule 3 of Cenvat Credit score Guidelines. The Income‟s rivalry is inaccurate that as per clause (vii) of Rule 3(1) further obligation leviable below Customs Tariff Act is equal to obligation of excise obligation specified below clause (i) of Rule 3(1) is paid. Rule 3 of the Cenvat Credit score Guidelines, 2004 is reproduced as below:-

Rule -3

(1) A producer or producer of ultimate merchandise or a supplier of taxable service shall be allowed to take credit score (hereinafter known as the CENVAT credit score) of –

(i) the obligation of excise specified within the First Schedule to the Excise Tariff Act, leviable below the Excise Act :

PROVIDED that CENVAT credit score of such obligation of excise shall not be allowed to be taken when paid on any items –

(a) in respect of which the good thing about an exemption below Notification No. 1/2011-CE, dated the first March, 2011 is availed; or

(b) laid out in serial numbers 67 and 128 in respect of which the good thing about an exemption below Notification No. 12/2012-CE, dated the seventeenth March, 2012 is availed;

……… ………

(vii) the extra obligation leviable below part 3 of the Customs Tariff Act, equal to the obligation of excise specified below clauses (i), (ii), (iii), (iv), (v) [, (vi) and (via)]:

(viii) ….. “

6. We discover that when it comes to clause (vii) of Rule 3(i) of Cenvat Credit score Guidelines, Cenvat credit score is allowed in respect of the extra obligation leviable below Part 3 of Customs Tariff Act, 1975 equal to the obligation of excise specified below clause (i). As per clause (i) of Rule 3(1), the obligation of excise specified within the first schedule to the Central Excise Tariff Act, 1985 leviable below the Excise Act. Within the current case, there isn’t any dispute that the obligation of excise is certainly laid out in first schedule of Central Excise Tariff Act, 1985 which is leviable below the Excise Act. It’s only by Customs Notification, the concession in price of obligation was offered i.e. @ 2% below Notification No. 12/2012-Cus. Solely because the concessional price is offered below Customs Notification, the character of excise obligation specified within the first schedule to the Central Excise Tariff Act doesn’t get altered. The Adjudicating Authority has ignored the truth that there may be not the speed of CVD offered within the Customs Tariff Act and the speed of obligation is offered in Central Excise Tariff Act. Due to this fact, in our view, even the two% which is nothing however a concessional CVD in lieu of excise obligation and the identical is specified within the first schedule of Central Excise Tariff Act. Due to this fact, at any time when CVD is paid, it flows from the Central Excise Tariff Act and never from the Customs Tariff Act and isn’t as per the obligation specified within the Customs Tariff Act. Due to this fact, the whole foundation of the interpretation made by the Adjudicating Authority relating to levy of CVD is inaccurate and on that foundation, the case of the division doesn’t maintain. A really an identical subject has come up in numerous circumstances earlier than this Tribunal and this Tribunal has taken constant view that Cenvat credit score in respect of two% concessional CVD paid on Coal is admissible. The direct judgment on the problem which thought-about numerous earlier selections is reproduced under:-

Hindustan Zinc Restricted vs. Commissioner of CGST, Udaipur – FINAL ORDER No. 50855-50856 / 2020

1 to eight … ….. …….. …….

“9.     It’s not in dispute that each Hindustan Zinc and Ultratech Cement paid further obligation of Customs below part 3 (1) of the Customs Tariff Act, after availing the good thing about the Customs Notification dated March 17, 2012 and that in addition they availed CENVAT credit score of the extra obligation of customs so paid below rule 3(1)(vii) of the CENVAT Credit score Guidelines. This availment of CENVAT credit score has been denied to them given that the extra obligation of customs paid @ 2% was not the obligation of excise as specified within the Excise Tariff Act and so CENVAT credit score of the extra obligation of customs paid below the Customs Notification dated March 17, 2012 have been wrongly availed.

10. It will, subsequently, be acceptable to breed the related portion of the present trigger discover issued by the Division to Hindustan Zinc, and the identical is reproduced under:

11. “Whereas, from the above, it transpires that the Cenvat credit score on the coal imported by the assessee is offered to the producer below Cenvat Credit score Guidelines, 2004 topic to the satisfaction of the situations laid in Rule 3 of the Cenvat Credit score Guidelines, 2004. The rule 3(1)(i) of Cenvat Credit score Guidelines, 2004 speaks that the Cenvat Credit score of obligation of excise as specified within the first schedule to the Central Excise Tariff Act, 1985 learn with any Notification issued below the Central Excise Act, 1944 is offered to the assessee. Additional, from the authorized provisions as contained in Rule 3(1)(vii) of the Cenvat Credit score Guidelines, 2004, it transpires that the assessee is eligible to take Cenvat Credit score of the extra obligation leviable below Part 3 of the Customs Tariff Act, 1975 equal to the obligation of excise specified below clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (viia) of the Rule 3 ibid. The obligation of excise on the coal imported by the assessee as specified within the first schedule to the Central Excise Tariff Act, 1985 is 6% and the efficient price is 1% or 2% vide Notification No. 12/2012-CE dated 17.03.2012, as amended, topic to the situation acknowledged therein. On this case, 2% Further Obligation on imported steam coal/bituminous coal as per Notification No. 12/2012-Cus dated 17.03.2012 as amended by Notification No. 12/2013-Cus dated 01.03.2013 has been paid by the assessee. Additional, it’s discovered that the mentioned obligation of two% just isn’t specified below Central Excise Tariff Act, 1985 learn with any notification issued below Central Excise Act, 1944 or guidelines made there below, subsequently the credit score of mentioned obligation of two% paid as Further Obligation of customs doesn’t seem like admissible to them.

12. From the above, it seems that the assessee has wrongly availed complete Cenvat credit score amounting to Rs. 2,75,97,106/- (As per Annexure ^„A‟) in contravention of the provisions of Rule 3 of Cenvat Credit score Guidelines, 2004. The mentioned wrongly availed Cenvat credit score, which was in any other case not admissible to them, is liable to be recovered from the assessee together with curiosity below rule 14 of Cenvat Credit score Guidelines, 2004 learn with Part 11A(4) and Part 11AA of the Central Excise Act, 1944 and Part 174 of the Central Items and Service Tax Act, 2017.”

11. The Commissioner has, by the impugned order, not accepted the reason supplied by Hindustan Zinc for the next causes:

25. “The notices have mainly contended that they rightly availed Cenvat credit score of the extra obligation of customs paid @ 2% when it comes to S. No. 122A or 123 of Notfn. No. 12/2012- Customs dated March 17, 2012, as amended by Notfn. No. 12/2013-Cus dated March 1,2013, as there isn’t any such restriction or barring of credit score in rule 3(1)(vii) just like the restriction or barring in rule 3(1)(i)(b) of CCR, 2004. Their rivalry is that they’ve taken credit score of CVD as relevant below S.No.122A or 123 of 12/2012-Customs dated 17.12.2012 and never S. No. 67 of notification 12/2012-CE dated 17.03.2012. I don’t agree with their rivalry due to the particular wording of the clause (i) and (vii) of sub rule 3(1) of CCR, 2004.

From the perusal of the mentioned sub rule it’s clear that credit score of the CVD paid by assessee is admissible as Cenvat credit score. Nevertheless, such proper to availment of credit score is not any unfettered. The mentioned credit score accessible is equal to the obligation of Excise specified below clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (by way of). The wording of this clause clearly specifies that it permits the credit score solely of the extra obligation leviable below part 3 of the Customs Tariff Act, equal to the obligation of Excise specified below clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (by way of). Clause (vii) just isn’t impartial of clause(i) and thus the proviso offered below clause (i) can also be relevant to credit score of CVD below clause (vii). If there was every other intention of Legislature they’d not have particularly talked about “equal to the obligation of Excise specified below clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (by way of)”. Thus, the notices should not legible to avail the credit score of CVD equal to obligation of excise if it isn’t eligible in clause (i).

Some other which means could be unfair for the native coal producers vis a vis imported coal, as if stand taken by notices is accepted, credit score wouldn’t be accessible on indigenously procured coal however could be accessible on imported coal. This might by no means be the intention of legislature and subsequently I don’t discover any substance or foundation within the rivalry of the notices.”

12. It will be acceptable to breed rule 3 of the CENVAT Credit score Guidelines and it’s as follows:

“RULE 3. CENVAT credit- (1) A producer or producer of ultimate merchandise or a supplier of output service shall be allowed to take credit score (hereinafter known as the CENVAT credit score) of –

(i) The obligation of excise specified within the First Schedule to the Excise Tariff Act, leviable below the Excise Act:

Supplied that CENVAT credit score of such obligation of excise shall not be allowed to be taken when paid on any goods-

(a) in respect of which the good thing about an exemption below Notification No. 1/2011-C.E., dated the first March, 2011 is availed; or

(b) laid out in serial numbers 67 and 128 in respect of which the good thing about an exemption below Notification No. 12/2012-C.E., dated the seventeenth March, 2012 is availed.

(ii) the obligation of excise specified within the Second Schedule to the Excise Tariff Act, leviable below the Excise Act; ;

(iii) the extra obligation of excise leviable below part 3 of the Further Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978); ;

(iv) the extra obligation of excise leviable below part 3 of the Further Duties of Excise (Items of Particular Significance) Act, 1957 (58 of 1957); ;

(v) the Nationwide Calamity Contingent obligation leviable below part 136 of the Finance Act, 2001 (14 of 2001); ;

(vi) the Training Cess on excisable items leviable below part 91 learn with part 93 of the Finance (No. 2) Act, 2004 (23 of 2004);

(by way of) the Secondary and Greater Training Cess on excisable items leviable below part 136 learn with part 138 of the Finance Act, 2007 (22 of 2007);

(vii) the extra obligation leviable below part 3 of the Customs Tariff Act, equal to the obligation of excise specified below clauses (i), (ii), (iii), (iv), (v), (vi) and (by way of):”

******

13. A naked perusal of rule 3(1)(i) signifies {that a} supplier of output service shall be allowed to take CENVAT credit score of the obligation of excise specified within the First Schedule to the Excise Tariff Act specified within the First Schedule to the Excise Tariff Act, leviable below the Excise Act topic to the 2 situations talked about in proviso (a) & (b). Nevertheless, rule 3(1)(vii) gives {that a} supplier of output service shall be allowed to take credit score of the extra obligation leviable below part 3 of the Customs Tariff Act, equal to the obligation of excise specified below clauses (i), (ii), (iii), (iv), (v), (vi) and (by way of).

14. The Commissioner has blended up rule 3(1)(i) and rule 3(1)(vii) of rule 3 of the CENVAT Credit score Guidelines. It is because of this that the situations laid out in rule 3(1)(i) have additionally been imported into rule 3 (1)(vii) of the CENVAT Credit score Guidelines. Within the first occasion, Hindustan Zinc had not paid obligation of excise specified within the First Schedule of the Excise Tariff Act, nor it had availed the good thing about the Central Excise Notification dated March 1, 2011 or that laid out in serial numbers 67 and 128 in respect of which the good thing about an exemption below Central Excise Notification dated March 17, 2012 had been availed. In reality, Hindustan Zinc had paid further obligation of customs by availing the profit below serial quantity 122A/123 of the Customs Notification dated March 17, 2012. It’s due to this misreading of rule 3(1) of the CENVAT Credit score Guidelines that led the Commissioner to commit an error.

15. The Regional Advisory Committee of Hyderabad Zone, in its assembly held on February 9, 2015 thought-about this very subject at level No. 1 and concluded that CENVAT credit score of further obligation of customs paid on imported items below Customs Notification dated March 17, 2013 (and never below Central Excise Notification) is offered for credit score. The related portion of the minutes is reproduced under:

“MINUTES OF THE MEETING OF THE REGIONAL ADVISORY COMMITTEE, HYDERABAD ZONE HELD ON FEBRUARY 09, 2015.

Level No. 1 – Credit score on imported coal:-

Many manufactures are importing steam coal on fee of duties. As per Customs Notification No. 12/2012-Cus. They’re availing concessional CVD @ 2%. Audit is of the view that since CVD has been paid @ 2% on imported coal, the credit score below Cenvat Credit score Guidelines, just isn’t accessible. Audit is taking a view that CVD in lieu of Excise obligation and if 2% obligation has been paid on imports the credit score just isn’t admissible as a result of a producer who’s procuring coal domestically the place excise obligation has been paid @ 2%, the credit score just isn’t accessible.

Board has issued a round No.41/2013-Cus. dated 21.10.2013 the place it has been clarified that 2% of CVD is “normal utilized” price and subsequently it’s trade‟s view that credit score of CVD is offered as per rule 3(1) (vii) of CENVAT credit score guidelines. Please make clear.

Reply:

For the reason that topic items have been levied at decreased price of two% CVD on their importation when it comes to part 3 of Customs Tariff Act, 1975 learn with Notification issued therein i.e below Notification No. 12/2012-Cus. dated March 17, 2013 (and never below Notification No. 1/2011 CE) which was not excluded from the purview of Rule 3 of CENVAT credit score guidelines, 2004, it seems that the CENVAT credit score of CVD paid on imported coal (i.e. 2% adv.) below Notification No. 12/2012-Cus. dated 17.03.2013 is eligible for credit score.”

16. A Division Bench of the Tribunal in Hindalco Industries Ltd. thought-about this exact subject and held that if further obligation of customs has been paid after bearing in mind the Customs Notification dated March 17, 2012, there could be no bar for availment of CENVAT credit score when it comes to rule 3(vii) of the CENVAT Credit score Guidelines. The related paragraph of the choice is reproduced under:

“5 On cautious consideration of the submissions made by each the edges, I discover that the only cause to disclaim Cenvat credit score to the appellant is that the authorities under has considered Notification No. 12/2012-CE., dated 17-3-2012. The authorities under haven’t contemplating the Notification No. 12/2012-CE., dated 17-3-2012. If similar is considered and obligation paid below the mentioned notification, there isn’t any bar for availment of cenvat credit score when it comes to Rule 3 (vii) of Cenvat Credit score Guidelines, 2004. Due to this fact, I maintain that authorities under has utilized improper provision to disclaim Cenvat credit score to the appellant. Due to this fact, Cenvat credit score can’t be denied to the appellant. In that circumstances, I maintain that the appellant has appropriately availed the Cenvat credit score of CVD paid on imported coal when it comes to Rule 3(7) of Cenvat Credit score Guidelines, 2004. Additional, I discover that the present trigger discover has been issued by invoking prolonged interval of limitation. Because the Income itself has utilized improper provisions of legislation, subsequently, the prolonged interval of limitation just isn’t invokable. In that circumstances, the impugned order is put aside.”

17. This choice of the Tribunal was subsequently adopted by the Tribunal in Jaypee Sidhi Cement Plant and the related portion of the choice is reproduced under :

“4. It’s submitted on behalf of the appellant that adjudicating authority under has wrongly made relevant the Notification No. 12/2012-C.E., dated 17-3-2012 to the info and circumstances on a improper presumption that the levy of CVD in dispute is since equal to the Excise obligation leviable on the same items and manufactured in India, that the good thing about Customs Notification No. 12/12 has wrongly been denied vide Order. Discovered Counsel has relied upon the choice of this Tribunal within the case of M/s. Hindalco Industries Ltd. vs. GST, Bhopal as was pronounced in Enchantment No. E/50179/2018-SM vide Remaining Order No. 50876/2018, dated 8-3-2018 [2018 (363) E.L.T. 1085 (Tri.-Del.)]. Reliance has additionally been positioned on one other choice of the Tribunal within the case of Asahi Songwon Colours Ltd. v. CCE & ST, Vadodara Enchantment No. E/10635/2017-SM vide Remaining Order No. A/11585/2018 (Ahmd.), dated 9-7-2018. Due to this fact, the order in problem is prayed to be put aside and attraction is prayed to be allowed.

5. Discovered Departmental Consultant justified the orders.

6. After listening to each the events and skimming the report, we’re of the opinion as follows:

It’s admitted that the appellants have imported coal consequent thereto they’ve paid 1%/2% on CVD along with Fundamental customs obligation. The CVD has been paid on the mentioned exempted price taking the good thing about Sl. No. 123 of Customs Notification No. 12/2012-Cus., dated 17-3-2012. It’s obvious from the order in problem that Division has denied the fee of CVD on exempted price and the availment of Cenvat credit score thereupon relying upon the S. No. 67 of Excise Notification No. 12/2012, dated 17-3-2012.

7. Perusal of each these notifications reveal that the Customs notification is relevant to the imported coal whereas the Excise Notification is relevant to the domestically manufactured items. The Situation No. 25 of Excise notification which denies availment of Cenvat credit score on imports of coal manufactured by the provider of coal, as has been taken the idea within the order-in-original, shall subsequently be relevant for domestically manufactured items solely and never on the imported coal. Perusal of Excise Notification No. 67 additional reveals that no such situation is relevant in case of import of coal.

8. The slim compass of the adjudication, subsequently, stays as as to if below Customs notification in opposition to S. No. 67 i.e., whereas importing the coal, the appellants have been entitled to avail the Cenvat credit score on the quantity of CVD paid. The Cenvat credit score is relevant as per Rule 3(1) of the Cenvat Credit score Guidelines, 2004. Clause 7 thereof entitles the appellants to avail the Cenvat credit score within the given circumstances.

The mentioned Rule itself clarifies that the Cenvat credit score of obligation of excise just isn’t allowed to be taken when paid on any items specified below S. Nos. 67 and 128 of Excise Notification No. 12/2012, dated 17-3-2012. Admittedly, the notification relied upon by the division for denying the impugned profit to the appellant is Customs Notification No. 12/2012, dated 17-3-2012. The restriction of Rule 3 just isn’t relevant to the mentioned notification. Above all, the Hon’ble Supreme Courtroom within the case of SRF Ltd. v. CC Chennai (2015 (318) E.L.T. 607 (S.C.)) has held that Excise Notification No. 12/2012 is relevant solely in respect of any digged or manufactured coal and never in respect of imported coal. The import whereof is allowed to have exempted price of CVD vide Customs Notification No. 12/2012-Cus.

9. In view of the whole above dialogue, we’re of the agency opinion that the adjudicating authority has dedicated a authorized error whereas denying the good thing about decreased CVD on imported coal whereas inserting reliance upon the Excise notification for manufacture of coal.” (emphasis equipped)

18. The identical view was taken by the Tribunal in Asahi Songwon Colours and the related paragraph is reproduced under:

“From the above Rule, it’s noticed that even when any obligation is paid by availing exemption Notification No. 12. 2012-CE dated 17.03.2012, the identical won’t be accessible as Cenvat credit score for the consumer of the products. Within the current case, admittedly, the appellant have imported Coal and CVD of two% is leviable when it comes to Customs Notification No. 12/2012-Cus. There isn’t any restriction offered in Rule 3 as regards obligation paid below Customs notification. This restriction is relevant solely in case of indigenous items on which the excise obligation @ 2% was paid availing Notification No. 12/2012-CE, which isn’t a case right here. Due to this fact, the appellant is entitled for Cenvat credit score in respect of CVD paid below Notification No. 12/2012-Cus.Furthermore, because the Notification No. 12/2012-CE is relevant solely in respect of indigenously manufactured coal and never in respect the imported coal as held by the Hob’ble Supreme Courtroom within the case SRF Restricted vs. CC, Chennai- 2015 (318) ELT 607 (SC). Due to this fact, even when the importer desires to avail the exemption of Notification No. 12/2012-CE for fee of CVD, the identical won’t be accessible to the importer. Due to this fact, in any case, within the case of import the Notification No. 12/2012-CE just isn’t related.”

19. Discovered Licensed Consultant of the Division has, nevertheless, positioned reliance upon the choice of the Gujarat Excessive Courtroom in Lonsenkiri Chemical compounds Industries.

20. This choice is clearly distinguishable on info. The appellant therein had availed the good thing about serial numbers 67 and 128 of the Central Excise Notification dated March 17, 2012. It is because of this that the Excessive Courtroom held that due to the situation set out in proviso (b) of rule 3(1)(i) of the CENVAT Credit score Guidelines that the appellant wouldn’t be entitled to avail CENVAT credit score. The related portion of the judgment of Gujarat Excessive Courtroom is reproduced under:

“2. The appellant imports coal on which ordinarily countervailing obligation within the nature of excise obligation could be payable. Nevertheless, by advantage of notifications 1 of 2011 dated 01.03.2011 and Sr. No. 67 and 128 of exemption notification 12 of 2012 dated 17.03.2012, the assessee would both pay obligation on the decreased price or Nil price of obligation. On this context, the query of permitting the assessee to say CENVAT credit score arose. The Income authorities and the Tribunal held that by advantage of proviso to rule 3(1) of CENVAT credit score Guidelines, 2004, (^„the Guidelines‟ for brief) in view of the profit availed by the assessee and the mentioned exemption notifications, CENVAT credit score wouldn’t be allowable. It’s this view which the assessee has challenged earlier than us. ********

3. It’s not in dispute that the assessee has availed of the good thing about exemption notification 1 of 2011 and in addition the advantages below Sr. 67 and 128 of exemption notification 12 of 2012. In that view of the matter, the above famous proviso of the Guidelines, would disentitle the assessee from claiming CENVAT credit score. Counsel for the assessee nevertheless submitted that this proviso refers to CENVAT credit score of “such obligation of excise”. Within the current case, what the assessee has paid was the countervailing obligation. The identical could have been computed when it comes to excise obligation payable on native producers, nonetheless, the identical can’t be handled as obligation of excise per se. He nevertheless candidly a greed that facility for getting CENVAT credit score within the case of the current assessee flows from rule 3 of the Guidelines. As per sub-rule (1) of rule 3, a producer or producer of a closing product or a supplier of output service could be allowed to take the CENVAT credit score on the obligation of excise specified within the First Schedule to the Excise Tariff Act, leviable below the Excise Act. Sub rule (1) rule 3 which supplies the concession of availment of CENVAT credit score of the obligation paid, additionally makes use of the identical expression “obligation of excise” as is used within the proviso which restricts or limits the appropriate of availment of such facility below sure circumstances. The expression “obligation of excise” utilized in clause (i) of sub-rule (1) of rule 3 and the above famous proviso to the mentioned rule, should obtain similar interpretation. The time period “obligation of excise” can’t have totally different connotations for the aim of sub-rule (1) of rule 3 and for the aim of proviso to the rule 3. Thus, if we settle for the rivalry of the counsel for the assessee that the countervailing obligation wouldn’t be included within the expression “obligation of excise” for the aim of the mentioned rule, the assessee‟s very basis of claiming the good thing about CENVAT credit score would disappear.

21. This choice of the Gujarat Excessive Courtroom in Lonsenkiri Chemical compounds Industries was additionally distinguished by the Tribunal in Aarti Industries Restricted and the related portion is reproduced under:

“As regard, the judgement cited by the Ld. AR within the case of Lonsenkiri Chemical compounds Industries (supra), I discover that within the mentioned case Cenvat Credit score was availed on the CVD paid below the Notification No. 12/2012-CE which was barred from availing the Cenvat Credit score when it comes to Rule 3(1) proviso (a) and (b) whereas within the current case in Rule 3(1) there isn’t any bar offered for CVD paid below Notification No. 12/12-Cus., subsequently, the judgement of Hon‟ble Excessive Courtroom in Lonsenkiri Chemical compounds Industries (supra) just isn’t relevant to the info of the current case.”

22. The Commissioner, subsequently, dedicated an illegality in denying the good thing about CENVAT credit score to Hindustan Zinc.

23. Alternatively, the Commissioner (Appeals), within the matter of Ultratech Cement, after contemplating the provisions of rule 3 of the CENVAT Credit score Guidelines and the choice of the Tribunal in Hindalco Industries Restricted and the Minutes of the Assembly of the Regional Advisory Committee of Hyderabad Zone held on February 9, 2015, held that Ultratech Cement was justified in taking the CENVAT credit score. The Commissioner (Appeals) additionally discovered that the judgment of the Gujarat Excessive Courtroom in Lonsenkiri Chemical compounds Industries wouldn’t be relevant to the info of the case and on this connection positioned reliance on the choice of the Tribunal in Aarti Industries Restricted.

24. For the explanations additionally mentioned above, there isn’t any error within the order handed the Commissioner (Appeals) within the matter of Ultratech Cement.

25. Thus, for all the explanations acknowledged above, Excise Enchantment No. 52928 of 2019 filed by Hindustan Zinc is allowed and the order dated September 24, 2019 handed by the Commissioner is put aside. Excise Enchantment No. 52774 of 2019 filed by the Commissioner is dismissed.”

7. The above choice of the Tribunal has thought-about numerous selections given by the totally different benches and in addition distinguished the selections relied upon by the Income and concluded that the appellant is entitled for Cenvat credit score in respect of two% CVD paid below Notification No. 12/12-Cus.

8. On the problem of limitation, we discover that the problem concerned is only of interpretation of Cenvat Credit score Guidelines, levy of CVD when it comes to Customs Tariff Act. It is usually the truth that on an identical subject many circumstances have been made out by the division throughout the nation in respect of various assessees which clearly reveals that the problem concerned is of interpretation of legislation. On this state of affairs, malafide intention can’t be attributed to the appellant. The appellant have been declaring availment of Cenvat credit score in respect of two% CVD and the identical have been mirrored in month-to-month ER-1 returns. Due to this fact, there may be completely no suppression of info or mis-declaration and many others. on the a part of the appellant. Accordingly, the demand for prolonged interval just isn’t sustainable on the bottom of time-bar additionally.

9. As per our above dialogue and findings, supported by Tribunal‟s choice within the case of Hindustan Zinc Restricted (supra) and numerous selections referred therein, the appellants are eligible for Cenvat credit score in respect of two% CVD paid below Notification No. 12/12-Cus. Accordingly, the impugned orders are set-aside and appeals are allowed with consequential reduction, if any, in accordance with legislation.

(Pronounced within the open court docket on 14.12.2021)