2017 (11) TMI 469 - AT - Central Excise

Appellant Granted Cenvat Credit Despite Duty Deduction in DEPB Passbook

Universal Coatings India Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Bangalore

The appellant was allowed to avail cenvat credit on imported inputs despite countervailing duty being deducted in the DEPB passbook. The Court held that ... CENVAT credit - credit availed on the imported inputs wherein the countervailing duty is deducted/adjusted in the DEPB passbook - appellant's case is during the period in question September 2004 to November 2004, they are eligible to avail the cenvat credit while Revenue is of the view that since the DEPB scripts which were utilized by the appellant were issued as per Exim Policy 2002-07 they are not eligible to avail the cenvat credit. Held that: - identical issue decided in the case of Commissioner of Central Excise Commissionerate, Ludhiana Versus M/s Neel Kanth Rubber Mills [2010 (4) TMI 281 - PUNJAB & HARYANA HIGH COURT], where it was held that the EXIM Policy amended, vide Notification dated 28.1.2004 and Notification No.96 dated 17.9.2004, postulate that “an importer shall be entitled to avail the Cenvat credit of additional duty leviable under section 3 of the Act against the amount debited in DEPB. There is no such condition in the indicated notifications that the debits made in DEPB, the licenses issued under the Foreign Trade Policy only would be eligible for credit and the debits made in DEPB issued under the previous policy will not be eligible for credit. It means, the assessee was entitled to claim the benefit in this relevant connection - appeal allowed - decided in favor of appellant. Issues:1. Eligibility of cenvat credit on imported inputs with countervailing duty deducted/adjusted in DEPB passbook.Analysis:The appeal in question challenges the eligibility of cenvat credit availed by the appellant on imported inputs where the countervailing duty was deducted/adjusted in the DEPB passbook. The appellant contended that during the period in question, they were entitled to avail the cenvat credit, while the Revenue argued that as the DEPB scripts used were issued under the Exim Policy 2002-07, the appellant was not eligible for the credit. The appellant had discharged the countervailing duty through DEPB scrips and utilized the goods in manufacturing. The issue was considered in light of a similar case by the Hon'ble High Court of Punjab & Haryana in the case of Neel Kanth Rubber Mills, where it was held that an importer could avail the cenvat credit of additional duty against the amount debited in DEPB, irrespective of the policy under which the DEPB was issued.2. Interpretation of Notification No. 96/2004-Cus. regarding CENVAT credit against DEPB debits.The judgment also delves into the interpretation of Notification No. 96/2004-Cus. which allowed importers to avail drawback or CENVAT credit of additional duty against the amount debited in DEPB issued under specific Foreign Trade Policies. The Department argued that CENVAT credit could only be availed if the DEPB was issued under the FTP of 2004-09, not the earlier policy. However, the High Court referred to the amended EXIM Policy and held that there was no condition restricting credit eligibility based on the policy under which the DEPB was issued. The Court dismissed the appeals by the Department, emphasizing that no substantial question of law arose, and the issue had already been settled in favor of the Assessee.In conclusion, the judgment highlights the consistent interpretation by different High Courts regarding the eligibility of cenvat credit against DEPB debits, irrespective of the policy under which the DEPB was issued. The impugned order was set aside, and the appeal was allowed in favor of the appellant, emphasizing the entitlement of the appellant to avail the cenvat credit in the given circumstances.