CESTAT allows Cenvat credit on countervailing duties

CESTAT allows Cenvat credit on countervailing duties

The Ahmedabad bench ruled that no malafide intention could be attributed to the appellants

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the Cenvat credit in respect of 2 percent countervailing duties (CVD).

The appellants, Arihant Tradelinks India and Maha Shakti Coke availed Cenvat credit of CVD paid on the input for coal of various types either directly imported by them or purchased from other importers. The import documents indicated that CVD at the rate of 2 percent was paid in terms of the amended 2012 Customs notification and Cenvat credit availed thereof.

But, the appellants were issued show cause notices wherein it was contended that the Cenvat Credit Rules 2004 governed admissibility of the Cenvat credit. The rules prescribed specific duties, which were allowed as Cenvat credit.

The additional duty of the Customs was equivalent to the excise duty leviable on articles produced or manufactured in India. The term "equivalent" has a greater significance that in any case the CVD paid is not equivalent to the duty of excise of Cenvat Credit Rules, 2004, credit thereof is not allowed to the manufacturer.

It was further contended in the show cause notices that the appellants were eligible for CVD credit paid, which was equal to the excise duty specified under the Central Excise Tariff Act, 1985.

Since the appellants had not paid the duty at the excise tariff rates and paid less, as per the Customs notification, they were not eligible for Cenvat credit. The adjudicating authorities, vide the impugned orders, confirmed the demand of Cenvat credit availed by the appellants and also imposed an equal penalty. Thereafter, the appellants filed the appeals.

The Coram of the judicial member, Ramesh Nair and technical member, Raju held that the issue involved was of interpretation of Cenvat Credit Rules and levy of CVD in terms of the Customs Tariff Act. In fact, many cases had been made out by the department across the country in respect of different assesses, on identical issues.

This indicated that the issue involved was of interpretation of the laws and the malafide intention could not be attributed to the appellants. They had been declaring availing of Cenvat credit in respect of 2 percent CVD and it reflected in their monthly returns, the Coram ruled.