2012 (11) TMI 863 - AT - Central Excise

Court allows appellants to claim cenvat credit for duty debited in DFCE under Notification No. 53/03-Cus

The judge, Mr. Mathew John, found in favor of the appellants, allowing them to avail cenvat credit for duty debited in Duty Free Credit Entitlement ... Cenvat credit of CVD paid through DEPB - Revenue was of the view that since no duty is paid in cash, cenvat credit should not have been taken on the basis of such debit entry in certificates - Notification No. 53/03-Cus dated 1.4.03 – Held that:- no merit in the contention of Revenue that cenvat credit is not available in respect of duty debited in DFCE certificate in view of clause 7 incorporated in Notification No. 53/03 dated 1.4.03 with effect from 17.11.2004. - This position should be effective from the date of said clause has been introduced. – Cenvat credit allowed Issues:1. Availability of cenvat credit for duty debited in Duty Free Credit Entitlement Certificates (DFCE) under Notification No. 53/03-Cus.Analysis:The case involved the appellants who imported cut-tobacco, an input necessary for their final product, and paid customs duty using Duty Free Credit Entitlement Certificates (DFCE). The appellants claimed cenvat credit of countervailing duty paid through these certificates under Notification No. 53/03-Cus. The Revenue contended that since no cash duty was paid, cenvat credit should not have been availed based on the debit entry in the certificates. A show cause notice was issued for recovery, which was upheld by lower authorities. The appellants argued that Notification No. 53/03-Cus was amended by Notification No. 97/04-Cus, introducing condition 7 allowing for drawback or cenvat credit against the amount debited in the certificate. The Ministry's Circular no. 27/06-Customs clarified this position. However, the lower authority held that the benefit was effective only from the date of the Circular, not the amendment of the Notification.Upon hearing both sides, the judge, Mr. Mathew John, found no merit in Revenue's argument against availing cenvat credit for duty debited in DFCE certificates. He noted that clause 7 was incorporated in Notification No. 53/03 dated 1.4.03 with effect from 17.11.2004, allowing for cenvat credit against duty debited in the certificates. The judge emphasized that this provision should be effective from the date of its introduction. As the import in question was made after 17.11.2005, the judge allowed the appeal filed by the appellants, granting them consequential relief.