Appeal granted for Cenvat credit on CVD paid for imported coal

The appeal was allowed, granting consequential relief to the appellant, as it was found that the denial of Cenvat credit on CVD paid for imported coal was based on the incorrect application of the relevant notifications. The appellant was held entitled to avail Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004, and the extended period of limitation could not be invoked due to the Revenue's misapplication of the law.

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Issues:
Appeal against denial of Cenvat credit on CVD paid by the appellant on imported coal.

Analysis:
The appellant, engaged in manufacturing aluminum ingots and billets, availed Cenvat credit on duty paid on inputs, capital goods, and service tax paid on inputs services. The dispute arose when the Revenue contended that the appellant, paying CVD on imported coal as per Notification No. 12/2012-Cus., was not entitled to Cenvat credit under Rule 3 of the Cenvat Credit Rules 2004. A show cause notice was issued for the period June 2012 to December 2012, invoking the extended period of limitation to deny Cenvat credit. The appellant challenged this denial.

The appellant argued that while Notification No. 12/2012-CE applied to domestically manufactured goods, Notification No. 12/2012-Cus. applied to imported coal, requiring a 1% duty payment. The appellant contended that Rule 3(1) proviso did not bar availing Cenvat credit for notifications under the Customs Act, unlike those under the Central Excise Act. The appellant claimed entitlement to Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004, asserting a misunderstanding of the provisions by the authorities below.

After considering the submissions, it was found that the denial of Cenvat credit was based on the incorrect application of Notification No. 12/2012-CE without considering Notification No. 12/2012-Cus. If duty paid under the latter notification was taken into account, there was no prohibition on availing Cenvat credit under Rule 3(7) of the Cenvat Credit Rules, 2004. Therefore, it was held that the appellant correctly availed Cenvat credit on CVD paid for imported coal. Additionally, since the Revenue applied the wrong provisions of the law, the extended period of limitation could not be invoked, leading to the setting aside of the impugned order.

In conclusion, the appeal was allowed, granting consequential relief to the appellant.

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