CENVAT credit condition for CVD exemption must be tested under the tariff fiction for imported goods, not real-world availability.

For levy and exemption of additional duty on imported goods, the imported article is treated as if manufactured in India under the tariff fiction, so exemption conditions must be tested on that basis. The Court held that the earlier view treating an impossible condition as automatically satisfied was no longer good law after Thermax Private Limited, Hyderabad Industries Limited and AIDEK Tourism Services Private Limited. Applying that principle, the importer satisfied Notification No. 6/2002-CE because the non-availment of CENVAT credit condition was met in law, and exemption from CVD was allowed.

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Issues: Whether the importer was entitled to exemption from payment of countervailing duty under Notification No. 6/2002-CE when the condition in the notification referred to non-availment of CENVAT credit under the CENVAT Credit Rules, 2002, but such credit was not admissible in the facts of the case.

Analysis: The notification granted nil rate of duty for the specified goods subject to the condition that no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002, had been taken in respect of inputs or capital goods used in manufacture. The Court held that the earlier view treating an impossible condition as automatically satisfied was no longer good law after Thermax Private Limited and Hyderabad Industries Limited, as explained in AIDEK Tourism Services Private Limited. For levy of additional duty, the imported article is to be treated as if it were manufactured in India, and the actual availability of a like article in India is not necessary. Applying that principle, the Court found that the appellants satisfied the notification condition and were therefore entitled to the exemption.

Conclusion: The appellants were entitled to exemption from payment of CVD under Notification No. 6/2002-CE, and the demand of CVD was liable to be set aside.

Ratio Decidendi: For levy and exemption of additional duty on imported goods, the statutory condition must be tested on the basis of the legal fiction created by the tariff scheme, and exemption cannot be denied merely because CENVAT credit would not in fact have been admissible or available in the circumstances.

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