2016 (4) TMI 190 - AT - Central Excise

Appellate tribunal grants appellant's appeal, recognizing Cenvat Credit entitlement under Finance Act, 2009.

The appellate tribunal set aside the impugned order and allowed the appellant's appeal, emphasizing the impact of the retrospective amendment on the ... Cenvat Credit on the goods imported under Duty Free Import Authorization (DFIA) Scheme - denial of claim for violation of condition provided in para (v) of Notification No. 40/2006-Cus - Held that:- In the show cause notice the credit was proposed to be denied for violation of condition provided in para (v) of Notification No. 40/2006-Cus, whereas the adjudication order and Commissioner (Appeals) order decided the matter referring to para (iiia) of the Notification. It is not permitted in law to adjudicate the matter in the show cause notice on the ground, which is not flowing from the show cause notice. Hence, it is not permitted that the adjudication order or the appellate order is traveled beyond the scope of show cause notice. I therefore do not agree with the lower authority in as much as the entire finding is based on para (iiia) of the Notification No. 40/2006. From the retrospective amendment in para (v) of Notification No. 40/2006-Cus, which has been validated for the period from 1 st May 2006 to 18 th February 2009, the appellant are entitled for the Cenvat Credit. Thus the appellants' availment of Cenvat Credit in respect of SAD paid on the import made under DFIA becomes legal and correct - Decided in favour of assessee Issues:- Denial of Cenvat Credit under DFIA Scheme- Interpretation of Notification No. 40/2006-Customs- Retrospective amendment validating Cenvat Credit entitlementAnalysis:1. Denial of Cenvat Credit under DFIA Scheme:The appeal challenged the Order-in-Appeal upholding the denial of Cenvat Credit by the Commissioner of Central Excise (Appeals). The appellant had taken credit on goods imported under the Duty Free Import Authorization (DFIA) Scheme. The show cause notice proposed denial of credit based on para (v) of Notification No. 40/2006-Customs. However, the adjudication order disallowed the credit referring to para (iiia) of the same notification. The appellant contended that the adjudication order exceeded the scope of the show cause notice, rendering the proceedings flawed.2. Interpretation of Notification No. 40/2006-Customs:The appellant argued that a retrospective amendment was made under Section 92 of the Finance Act, 2009, validating entitlement to Cenvat Credit for the period from May 1, 2006, to February 18, 2009. The appellant claimed that the necessary amendment was also made in the Foreign Trade Policy, entitling them to the credit. The appellate authority and adjudicating authority had based their decisions on para (iiia) of the Notification, which the appellant contested as beyond the scope of the show cause notice.3. Retrospective Amendment Validating Cenvat Credit Entitlement:The retrospective amendment in para (v) of Notification No. 40/2006-Customs, validated for the specified period, established the appellant's entitlement to Cenvat Credit. Consequently, the appellant's availing of Cenvat Credit for the Special Additional Duty (SAD) paid on imports under DFIA was deemed legal and correct. The appellate tribunal set aside the impugned order and allowed the appellant's appeal, emphasizing the impact of the retrospective amendment on the Cenvat Credit entitlement.In conclusion, the judgment highlighted the significance of adherence to the scope of show cause notices, the interpretation of relevant notifications, and the implications of retrospective amendments on entitlements like Cenvat Credit. The decision favored the appellant, acknowledging their entitlement to the credit based on the retrospective validation provided under the Finance Act, 2009.