Importers cannot be denied CVD exemption on manufacturer-based Cenvat credit conditions where credit is not admissible to them.

An exemption condition requiring non-availment of Cenvat credit, framed in manufacturer terms, could not be used to deny countervailing duty exemption to an importer. The notification was treated as materially identical to the one considered in SRF Ltd., where the relevant principle was that Cenvat credit was not admissible to the importer in the first place, so the condition could not be regarded as unfulfilled on that basis. Applying that principle, the denial of benefit under Notification No. 30/2004-CE was held unsustainable and the importer was entitled to exemption from countervailing duty.

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Issues: Whether the importer was entitled to exemption from payment of countervailing duty under Notification No. 30/2004-CE dated 09.07.2004 despite the condition relating to non-availment of Cenvat credit being framed with reference to the manufacturer.

Analysis: The exemption notification was in substance identical to the notification considered by the Supreme Court in SRF Ltd., where it was held that the condition of non-availment of Cenvat credit could not be used to deny exemption to an importer, because credit was not admissible to the importer in the first place and the condition could not be said to remain unfulfilled on that basis. As the present notification contained the same operative condition, the same legal principle governed the dispute.

Conclusion: The importer was entitled to the exemption from countervailing duty, and the denial of benefit under Notification No. 30/2004-CE was unsustainable.

Final Conclusion: The appeals succeeded and the impugned orders were set aside, with consequential relief to the appellant.

Ratio Decidendi: Where an exemption notification imposes a condition of non-availment of Cenvat credit in terms applicable to a manufacturer, that condition cannot be invoked to deny exemption to an importer to whom such credit is not admissible.

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