Cenvat credit on cess paid with countervailing duty remains admissible when duty was actually paid and not refunded.

Cenvat credit was held admissible on Education Cess and Secondary and Higher Education Cess paid as part of countervailing duty, despite exemption notifications. Rule 3(1)(vii) of the Cenvat Credit Rules, 2004 was applied to treat the additional duty actually paid on inputs as creditable, including the relevant cess components. The recipient of inputs cannot re-assess the supplier's duty position at the input stage, and credit remains available unless the duty has been refunded. On that basis, denial of credit was set aside and the assessee's claim was allowed.

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Issues: Whether Cenvat credit was admissible on Education Cess and Secondary and Higher Education Cess paid on countervailing duty despite the exemption notifications.

Analysis: Rule 3(1)(vii) of the Cenvat Credit Rules, 2004 permits credit of additional duty leviable under Section 3 of the Customs Tariff Act, 1975 equivalent to excise duty, including the cesses covered by the relevant clauses. The Court applied the principle that the recipient of inputs cannot re-assess the duty paid by the manufacturer at the input stage, and that duty actually paid remains creditable unless it is refunded. On that basis, the exemption position under the customs notifications did not justify denial of credit already taken on the duty component paid.

Conclusion: The Cenvat credit of the disputed amount was admissible and the denial of credit was set aside in favour of the assessee.

Ratio Decidendi: Where duty has in fact been paid on inputs, the recipient is entitled to Cenvat credit of that duty unless the amount has been refunded, and the recipient cannot re-open or re-assess the duty position at the supplier's end.

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