Rebate on DEPB-paid countervailing duty allowed, while special additional duty remained outside the rebate notification.

Rebate under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 21/2004-C.E. (N.T.) was available for countervailing duty on imported inputs discharged through debit in DEPB scrip, because the governing policy, circulars and notification treated duty paid through the DEPB route as eligible for rebate-related fiscal benefits and the bill of entry was accepted as a duty-paying document. Rebate was not available for special additional duty under section 3(5) of the Customs Tariff Act, 1975, because that levy was not treated as a duty of excise for the rebate mechanism and was not covered by the notification's specified duties. The revisional challenge therefore succeeded only in part.

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Issues: (i) whether rebate of countervailing duty paid on imported inputs through debit in DEPB scrip was admissible under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 21/2004-C.E. (N.T.) dated 6-9-2004; (ii) whether special additional duty under section 3(5) of the Customs Tariff Act, 1975 was eligible for rebate under the said notification.

Issue (i): whether rebate of countervailing duty paid on imported inputs through debit in DEPB scrip was admissible under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 21/2004-C.E. (N.T.) dated 6-9-2004.

Analysis: The exported goods were manufactured using imported inputs on which additional customs duty had been discharged by debit in DEPB scrip. The statutory materials relied upon in the order, including the Foreign Trade Policy, the Board's circulars and the amending notification, showed that duty paid through the DEPB route was treated as duty for purposes of Cenvat credit and drawback. Once countervailing duty on imported inputs was recognised as eligible for rebate, the mode of discharge by DEPB debit could not by itself defeat the rebate claim. The bill of entry was also treated as an acceptable duty-paying document in the circumstances.

Conclusion: The rebate of countervailing duty paid through DEPB scrip was admissible, and the assessee succeeded on this issue.

Issue (ii): whether special additional duty under section 3(5) of the Customs Tariff Act, 1975 was eligible for rebate under the said notification.

Analysis: Special additional duty under section 3(5) is levied to counterbalance internal taxes and is not treated as a duty of excise for the rebate mechanism under the notification. The order also noted that the notification's explanatory list did not bring such levy within the duties specified for rebate. On that basis, the claim for rebate on SAD could not be sustained.

Conclusion: Rebate on special additional duty was not admissible, and this issue was decided against the assessee.

Final Conclusion: The revisional challenge succeeded only in part: rebate was upheld for countervailing duty paid through DEPB debit, but denied for special additional duty, leaving the impugned order modified accordingly.

Ratio Decidendi: Where imported-input countervailing duty is treated by the governing policy and circulars as duty paid through DEPB debit for rebate-related fiscal benefits, rebate cannot be denied solely because payment was made through DEPB; however, a levy not covered by the rebate notification's specified duties, such as special additional duty under section 3(5), remains ineligible.

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