Cenvat credit from export-oriented units is limited to customs countervailing duty, not full excise duty paid.

Credit of duty paid by a hundred per cent export-oriented undertaking was confined to the additional duty of customs payable on like imported goods under Rule 57AB(2) of the Central Excise Rules, 1944. Duty paid by the unit could not be taken in full as credit merely because it was paid as excise duty under the relevant notification. The permissible set-off was limited to the customs countervailing duty element under Section 3 of the Customs Tariff Act, 1975, and the matter required fresh quantification on that basis. The impugned order was set aside and the case remanded for re-quantification.

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Issues: Whether credit of duty paid by a hundred per cent export-oriented undertaking was admissible in full or was restricted to the amount equivalent to the additional duty of customs payable on like imported goods under Rule 57AB(2) of the Central Excise Rules, 1944.

Analysis: The restriction in Rule 57AB(2) links the credit available on goods manufactured by a hundred per cent export-oriented undertaking to the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 on like imported goods. The duty paid by the unit is not available in full as credit merely because it is paid as excise duty under the relevant notification. The permissible credit is confined to the customs countervailing duty element that would arise on import of similar goods into India, and the matter therefore required fresh quantification on that basis.

Conclusion: Credit was not admissible in full and had to be restricted to the customs duty equivalent; the impugned order was set aside and the matter was remanded for re-quantification.

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