Cenvat credit on CVD paid through DEPB debit upheld, with waiver of pre-deposit and stay of recovery.

Cenvat credit was treated as admissible on CVD paid through debit in DEPB scrips where the claim was supported by Notification No. 96/2004-Cus. and departmental circulars. The later circular, issued after Law Ministry consultation, clarified that no separate amendment to the Cenvat Credit Rules was required for allowing such credit. As the credit had been taken under the post-October 2004 Foreign Trade Policy framework, the appellants were granted waiver of pre-deposit and stay of recovery, and the credit claim was accepted.

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Issues: Whether Cenvat credit was admissible on CVD paid through debit in DEPB scrip, and whether waiver of pre-deposit and stay of recovery should be granted.

Analysis: The credit was claimed under Notification No. 96/2004-Cus. and the Ministry's clarification in Circular No. 59/2004-Cus. The later Circular No. 27/2006-Cus., issued after consultation with the Law Ministry, stated that no amendment to the Cenvat Credit Rules was required for allowing credit of this nature. The credit had been availed after October 2004 under the new Foreign Trade Policy, and the cited notification and circulars supported admissibility of the credit.

Conclusion: The credit issue was decided in favour of the appellants, and waiver of pre-deposit with stay of recovery was granted.

Final Conclusion: The order granted interim relief by accepting the appellants' entitlement to the credit claimed and by suspending recovery of the disputed amounts.

Ratio Decidendi: Where the governing customs notification and departmental circulars, including a later law ministry-cleared circular, recognize entitlement to Cenvat credit on CVD paid through DEPB debit, the credit cannot be denied on the ground that the Cenvat Credit Rules required a separate amendment.

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