2013 (10) TMI 802 - AT - Central Excise

Tribunal grants CENVAT credit on Education Cesses for inputs from 100% EOUs

The Tribunal ruled in favor of the applicants, allowing eligibility of CENVAT credit on Education Cesses paid on CVD and Additional Customs Duty under ... 100% EOU - credit based on a formula prescribed under Rule 3(7) - inclusion of additional duty leviable u/s 3(5) along-with CVD u/s 3(1) of the Customs Tariff Act - Waiver of pre-deposit – Held that:- From 1.3.05 if the inputs were imported, the manufacturer would be eligible for cenvat credit of duties paid under section 3(1) and section 3(5) of the Customs Tariff Act, 1975 - there is no warrant to treat the term CVD referred to in Rule 3 (7) of the Cenvat Credit Rules as applicable only to additional duty leviable under Section 3(1) of the Customs Tariff Act - The term CVD has not been specifically defined in the Cenvat Credit Rules, but it has been explained that 'BCD & CVD denote advelorm rates in per cent, of basic customs duty and additional duty of customs leviable '. The additional duty levied under Section 3(5) has also been made eligible for credit, it would be proper to hold that the term CVD referred to in the formula would refer to both varieties of additional duties leviable under Section 3(1) and 3(5) of the Customs Tariff Act, 1975 - As per the General Clause Act, when the context requires the word used in singular can mean in plural and, the term CVD can mean the two CVDs - even after insertion of new proviso in Rule 3(7) of CENVAT Credit Rules, formula is still retained in the said Rules - Prima facie, the applicants are entitled to grant stay of recovery of dues till the disposal of appeals - Pre-deposit of the entire amount of duty, penalty and interest is waived during the pendency of the appeal – Stay granted. Issues:Eligibility of CENVAT credit on Education Cesses paid on CVD and Additional Customs Duty paid under Section 3(5) of the Customs Tariff Act (SAD) in respect of inputs received from 100% EOUs.Analysis:The case involved the eligibility of CENVAT credit on Education Cesses paid on CVD and Additional Customs Duty paid under Section 3(5) of the Customs Tariff Act in relation to inputs from 100% EOUs for the period from April '07 to September '09. The applicants filed appeals seeking waiver of pre-deposit of CENVAT Credit and penalty under relevant rules. The Tribunal had previously ruled in favor of similar issues in cases like Tyche Industries Ltd, Shreya Pets Pvt. Ltd., Emcure Pharmaceuticals Ltd., and M/s. Venkateshwara Precision Components. The Tribunal consistently held that CVD under Rule 3(7) of the CENVAT Credit Rules includes various duties such as Additional Duty under the Customs Act, additional duty under Section 3(5) of the Customs Tariff Act, Education Cess, and Secondary & Higher Education Cess. The demand of duty was also argued to be partly barred by limitation.The Revenue argued that a new proviso inserted in Rule 3(7) of the CENVAT Credit Rules in 2009 allowed credit on additional duty under Section 3(5) of the Customs Tariff Act and Educational Cesses, but with no retrospective effect. The case of M/s. Venkateshwara Precision Components was cited regarding the additional duty under Section 3(5) of the Customs Tariff Act. After hearing both sides and examining the records, the Tribunal found that the applicants had availed CENVAT credit as per the specified formula in the Rules. The Tribunal reiterated that CVD in the formula covers various duties including those leviable under Section 3(1) and 3(5) of the Customs Tariff Act and Education Cesses. The Tribunal referred to relevant portions of the decision in the case of M/s. Venkateshwara Precision Components to support its findings.Even after the insertion of the new proviso, the formula in the CENVAT Credit Rules remained unchanged. The Tribunal opined that the present case aligned with its previous decisions and granted stay of recovery of dues during the appeal process, waiving the pre-deposit of the entire amount of duty, penalty, and interest. The appeal was fixed for a hearing on a specified date due to the significant amount of dues involved. The order of the Commissioner (Appeals) was set aside, and the appeal was allowed with consequential relief as per the law.