Tribunal Rules in Favor of Appellants, Waives Duty Demand

The Tribunal held in favor of the appellants, waiving the duty demand of Rs. 1,63,52,371/- and Education Cess of Rs. 3,27,047/- under the DFCE scheme. It was determined that the appellants were eligible to avail credit of additional duty of Customs paid by debit under the Cenvat Credit Rules, 2004, despite the amendment to Notification No. 53/2003-Cus. The Tribunal emphasized that the policy changes by DGFT permitted such credit and that the appellants had a prima facie case in their favor, leading to the disposal of the matter in favor of the appellants.

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Issues:
1. Duty demand confirmation under DFCE scheme prior to amendment of Notification No. 53/2003-Cus.
2. Eligibility of credit of additional duty of Customs paid by debit under Cenvat Credit Rules, 2004.

Analysis:
1. The impugned order confirmed a duty demand of Rs. 1,63,52,371/- and Education Cess of Rs. 3,27,047/- under the DFCE scheme. The Adjudicating Commissioner held that the appellants were not eligible to avail credit of additional duty of Customs paid by debit before the amendment of Notification No. 53/2003-Cus. by Notification No. 97/2005-Cus. The Department supported this finding, arguing that the appellants did not pay the additional duty by cash but by debit, making them ineligible for credit until the DFCE scheme was amended on 17-11-2005.

2. The appellants contended that the necessary policy changes by DGFT on 4-6-2005 allowed credit of additional duty paid by debit under the DFCE scheme. They argued that since the Cenvat Credit Rules, 2004 did not change in this regard, the credit claimed under these Rules should not be disallowed before 17-11-2005. The Tribunal found that the Cenvat Credit Rules permit credit of additional duty under Rule 3(1) (Clause VII). The Tribunal noted that the amendment to Notification No. 53/2003-Cus. on 17-11-2005 should not affect the grant of credit under the Cenvat Credit Rules, 2004. As there was no provision in the Rules to deny the credit claimed, the Tribunal held that the appellants had a prima facie case in their favor. Consequently, the Tribunal waived the requirement of pre-deposit during the appeal's pendency and disposed of the matter in favor of the appellants.

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