2019 (6) TMI 65 - AT - Central Excise

Tribunal Upholds Dismissal of Appeal on CENVAT Credit for Customs Cess

Nature S Fragrances And Flavours Versus Commissioner Of Central Tax, Mysuru Commissionerate

The Tribunal upheld the Commissioner (A)'s order, dismissing the appellant's appeal regarding the inadmissibility of CENVAT credit on Customs Secondary ... CENVAT Credit - Secondary Education Cess and Customs Higher Education Cess paid on the goods imported by them - HELD THAT:- As per Rule 3(1) of CENVAT Credit Rules, 2004, CENVAT credit cannot be taken on Customs Secondary Education Cess and Customs Higher Education Cess whereas in the present case, the Bill of Entry clearly shows that appellant has availed CENVAT credit of Customs Secondary Education Cess and Customs Higher Education Cess and further the Bill of Entry clearly indicates that Education Cess on CVD was zero. In view of this specific mention in the Bill of Entry that the appellant has availed CENVAT credit of Customs Secondary Education Cess and Customs Higher Education Cess which is not permitted under CENVAT Credit Rules. Further, the Commissioner (A) has discussed all the grounds raised by the appellant and has come to the conclusion that the appellant is not entitled to take the credit on the Cess paid by them. Appeal dismissed - decided against appellant. Issues:- Admissibility of CENVAT credit on Customs Secondary Education Cess and Customs Higher Education Cess paid on imported goods.Analysis:The case involved an appeal against the Commissioner (A)'s order rejecting the appellant's appeal regarding the admissibility of CENVAT credit on Customs Secondary Education Cess and Customs Higher Education Cess paid on imported goods. The appellant, a manufacturer of perfumery products, had availed credit of duty paid on inputs under the CENVAT Credit Rules, 2004. The dispute arose when it was found that the appellant had availed CENVAT Credit of Customs Secondary and Higher Education Cess, which are not admissible as credit. The show-cause notice demanded reversal of the credit with interest and penalty, leading to the appeal.The appellant argued that the impugned order was unsustainable as it did not consider the relevant provisions of the law. The appellant contended that the CENVAT Credit Rules did not deny credit on Cess on the countervailing duty portion of the imported material. On the other hand, the respondent defended the order, stating that the appellant wrongly availed CENVAT credit on Customs Secondary and Higher Education Cess paid on imported goods, which was not permitted under Rule 3(1) of the CENVAT Credit Rules, 2004.The Tribunal analyzed the issue and found that as per Rule 3(1) of the CENVAT Credit Rules, 2004, CENVAT credit could not be taken on Customs Secondary Education Cess and Customs Higher Education Cess. The Bill of Entry clearly showed that the appellant had availed such credit, which was impermissible. The Commissioner (A) had thoroughly examined the grounds raised by the appellant and concluded that the appellant was not entitled to take credit on the Cess paid by them. The Commissioner (A) referenced relevant notifications and exemptions to support the decision, highlighting that the Education Cess on countervailing duty was zero during the period in question. The Bills of Entry submitted indicated that the Education Cess paid was Customs Education Cess, which was not admissible for CENVAT credit under Rule 3 of the CENVAT Credit Rules, 2004.Ultimately, the Tribunal upheld the Commissioner (A)'s order, dismissing the appellant's appeal based on the reasoned findings provided. The judgment was pronounced in open court on 31/05/2019.