Appellants Win Cenvat Credit Appeal: Timing of Regulatory Changes Key

INTERNATIONAL TOBACCO CO. LTD. Versus COMMR. OF C. EX., GHAZIABAD

INTERNATIONAL TOBACCO CO. LTD. Versus COMMR. OF C. EX., GHAZIABAD - 2013 (297) E.L.T. 131 (Tri. - Del.) Issues:
1. Availability of Cenvat credit on duty debited in Duty Free Credit Entitlement Certificates.

Analysis:
The case involved the appellants importing cut-tobacco, an input necessary for their final product, and paying Customs duty using Duty Free Credit Entitlement Certificates. The appellants took Cenvat credit of countervailing duty paid through such certificates as per the proviso of Notification No. 53/2003-Cus., dated 1-4-2003. The Revenue contended that since no cash duty was paid, Cenvat credit should not have been claimed based on the debit entry in the certificates. A show cause notice was issued for recovery, which was upheld by the lower authorities.

The Counsel for the appellants argued that Notification No. 53/2003-Cus. was amended by Notification No. 97/2004-Cus., dated 17-11-2004, introducing condition 7 allowing for Cenvat credit against the amount debited in the certificates. The Counsel also referred to Circular No. 27/2006-Cus., dated 13-10-2006, clarifying this position. However, the lower authority held that the benefit was only applicable from the date of the circular, not the amendment of the notification.

Upon hearing both sides, the judge found no merit in the Revenue's argument, stating that Cenvat credit is indeed available for duty debited in DFCE certificates due to the incorporation of Clause 7 in Notification No. 53/2003 from 17-11-2004. The judge ruled that this position should be effective from the introduction of the clause, allowing the appeal filed by the appellants concerning imports made after 17-11-2005. Consequently, the appellants were granted consequential relief.

Overall, the judgment clarified the availability of Cenvat credit on duty debited in Duty Free Credit Entitlement Certificates, emphasizing the significance of the amendment to the notification and the effective date of such provisions for import-related transactions.