Cenvat credit on cess paid with CVD for 100% EOU inputs was held admissible under Rule 3(7)(a).

Cenvat credit on Education Cess and Secondary and Higher Secondary Education Cess paid on the CVD portion of inputs received from a 100% EOU under Notification No. 23/2003-CE was held admissible under Rule 3(7)(a) of the Cenvat Credit Rules, 2004. The Tribunal followed its earlier decisions and treated the CVD component as inclusive of the cess component for this purpose, holding that the rule's restriction applied only to the Basic Customs Duty equivalent and not to the Additional Duty of Customs. On that reasoning, the cess component paid on the CVD portion qualified for credit and the assessee succeeded.

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Issues: Whether Cenvat credit of Education Cess and Secondary and Higher Secondary Education Cess paid on the CVD portion by a 100% EOU supplier was admissible under Rule 3(7)(a) of the Cenvat Credit Rules, 2004.

Analysis: The credit was claimed on inputs received from a 100% EOU under Notification No. 23/2003-CE. The Tribunal followed its earlier decisions and treated the CVD component as inclusive of the cess component for purposes of Rule 3(7)(a), holding that the restriction in the rule applied only to the Basic Customs Duty equivalent and not to the Additional Duty of Customs. On that basis, the cess component paid on the CVD portion was treated as eligible credit.

Conclusion: The credit was held admissible and the assessee succeeded.

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