Cenvat credit on imported coal CVD allowed where the excise exemption restriction did not extend to customs levy.

Cenvat credit was held admissible on 2% CVD paid on imported coal under Notification No. 12/2012-Cus because the restriction in Rule 3(1)(i)(b) applied only where the benefit of the specified excise exemption notification was availed. The imported coal attracted duty under the customs notification, not the excise notification, so the embargo could not be extended to deny credit on duty paid under the customs regime. The distinction between imported coal and indigenously manufactured coal was material, and denial of credit on that basis was unsustainable; the demand was set aside and credit entitlement upheld.

---

---

Issues: Whether Cenvat credit was admissible on 2% CVD paid on imported coal under Notification No. 12/2012-Cus, where the restriction in Rule 3(1)(i)(b) of the Cenvat Credit Rules applied only to goods on which benefit of Notification No. 12/2012-CE was availed.

Analysis: The restriction in Rule 3(1)(i)(b) disallows credit only when duty of excise is paid on goods covered by the specified excise exemption notification. The imported coal in question attracted CVD under the customs exemption notification, not the excise notification. The embargo, therefore, did not extend to duty paid on imported goods under the customs regime. The distinction between imported coal and indigenously manufactured coal was material, and the customs notification could not be treated as the excise notification for the purpose of denying credit.

Conclusion: Cenvat credit on the 2% CVD paid under Notification No. 12/2012-Cus was admissible, and the denial of credit was unsustainable.

Final Conclusion: The demand was set aside and the assessee's entitlement to credit was upheld.

Ratio Decidendi: A restriction on Cenvat credit tied specifically to an excise exemption notification cannot be applied to deny credit on CVD paid on imported goods under a customs notification unless the rule expressly extends to that customs levy.

---