Additional customs duty computation for Cenvat credit must follow tariff valuation rules and actual duty paid

Additional customs duty under sections 3(1) and 3(2) of the Customs Tariff Act, 1975 is computed at a rate equivalent to central excise duty on like goods, and for ad valorem levy the assessable value is the customs value under section 14 of the Customs Act, 1962 plus basic customs duty. Applying that method, the duty liability was reduced to 82.55% of the differential duty because export obligation was fulfilled only to the extent of 17.45%. On that basis, the additional customs duty component actually paid was Rs. 68,51,381/-, and the lower Cenvat credit figure adopted by the department was incorrect.

---

---

Issues: Whether the additional customs duty component of the duty paid pursuant to the Settlement Commission order was correctly computed for allowing Cenvat credit.

Analysis: Under section 3(1) and section 3(2) of the Customs Tariff Act, 1975, additional customs duty on imported goods is chargeable at the rate equivalent to central excise duty on like goods, and where it is ad valorem, the assessable value is the customs value under section 14 of the Customs Act, 1962 plus basic customs duty. Applying that method, the total differential duty payable on the imports, in the absence of exports, was Rs. 1,49,39,415/-. Since the export obligation was fulfilled only to the extent of 17.45%, the duty liability was correctly taken at 82.55% of that amount. On that basis, the additional customs duty component of the duty actually paid worked out to Rs. 68,51,381/-, not the lower figure adopted by the department.

Conclusion: The restriction of Cenvat credit to Rs. 57,03,557/- was incorrect, and the assessee was entitled to Cenvat credit of Rs. 68,51,381/-.

---