2020 (3) TMI 483 - AT - Central Excise

Duty paid under provisional assessment allows CENVAT credit

C.C.E., Bharuch Versus M/s. Hindalco Industries Ltd

The Tribunal held that the duty paid under provisional assessment is not merely a deposit but legitimate duty under Section 18 of the Customs Act, ... CENVAT credit of CVD paid - excess payment of CVD - credit was availed in respect of CVD paid on imported raw-material namely copper Concentrates based on provisionally assessed bills of entry - SCN proposed to deny the cenvat on the ground that the credit on the bill of entry can be taken only if it is finally assessed and credit cannot be taken on provisionally assessed bill of entry - case of the department is that the correct value of the goods is the value which was finally assessed, therefore, the respondent were not entitle for the cenvat credit paid in excess on the basis of provisionally assessed bills of entry. HELD THAT:- The provisional assessment is provided under a statute i.e. under Section 18 of the Customs Act, 1962, therefore, the duty paid on the provisional assessment of bills of entry is also with authority of law. Therefore, it cannot be said that the payment made under provisionally assessed bills of entry is a deposit and not a duty. The provisionally assessed bills of entry is also valid document for availing the cenvat credit, for the reason that under Rule 9 of Cenvat Credit Rules only bill of entry is prescribed on the basis of which the payment of customs duty was made, therefore, bill of entry whether it is provisional of finally assessed, the Cenvat Credit is admissible. There is no bar in the law to restrict the Cenvat Credit on the CVD paid on the basis of provisionally assessed bills of entry. Therefore, merely because the Cenvat Credit was taken on provisionally assessed bills of entry, there is no reason to deny the Cenvat Credit. It is a settled law that even if any duty or excess duty paid which is otherwise not payable, and the recipient and Cenvat Credit cannot be disputed. It is settled in various decisions that even though certain amount of Excise duty/service tax not payable as per law but the manufacturer/service provider paid the duty /service tax, at the recipient and Cenvat Credit cannot be denied only on the ground that the same was not payable by the Manufacturer/Service provider - On the same analogy in the present case also even though as per the final assessment there was excess payment of CVD which was otherwise not payable, the Cenvat Credit on the said excess paid CVD cannot be denied. Reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-III VERSUS NAHAR GRANITIES LTD.[2014 (5) TMI 57 - GUJARAT HIGH COURT]. The adjudicating authority has given proper reasoning and correctly interpreted the various provision of Customs Valuation, provisional assessment and Cenvat Credit Rules - there are no infirmity in the finding given by the adjudicating authority - appeal dismissed - decided against Revenue. Issues Involved:1. Admissibility of CENVAT credit based on provisionally assessed bills of entry.2. Classification of duty paid under provisional assessment as deposit or duty.3. Legal validity of provisional assessment under Section 18 of the Customs Act, 1962.4. Applicability of Rule 3 of the CENVAT Credit Rules, 2004.5. Precedent cases supporting the admissibility of CENVAT credit on provisionally assessed duties.Issue-wise Detailed Analysis:1. Admissibility of CENVAT Credit Based on Provisionally Assessed Bills of Entry:The appellant availed CENVAT credit on the Countervailing Duty (CVD) paid on imported copper concentrates based on provisionally assessed bills of entry. The department argued that since the final assessment determined a lower value, the excess duty paid initially should not be eligible for CENVAT credit. However, the adjudicating authority dropped the proceedings, leading to the Revenue's appeal.2. Classification of Duty Paid Under Provisional Assessment as Deposit or Duty:The department contended that the duty paid under provisionally assessed bills of entry should be considered as a deposit rather than actual duty, thus making it ineligible for CENVAT credit. The respondent countered this by stating that provisional assessments are legally sanctioned under Section 18 of the Customs Act, 1962, and thus the duty paid should be considered as such and not merely a deposit.3. Legal Validity of Provisional Assessment Under Section 18 of the Customs Act, 1962:The respondent argued that the provisional assessment is a valid legal process under Section 18 of the Customs Act, 1962. Therefore, any duty paid under this provisional assessment should be considered legitimate for the purpose of availing CENVAT credit. The Tribunal agreed, stating that the provisional assessment is provided under statute and thus carries the authority of law.4. Applicability of Rule 3 of the CENVAT Credit Rules, 2004:The respondent further argued that even if the excess duty was not payable, the CENVAT credit is admissible under Rule 3 of the CENVAT Credit Rules, 2004. The Tribunal noted that Rule 9 of the CENVAT Credit Rules only requires a bill of entry for availing credit, irrespective of whether it is provisional or final.5. Precedent Cases Supporting the Admissibility of CENVAT Credit on Provisionally Assessed Duties:The respondent cited several precedents where similar issues were adjudicated in favor of allowing CENVAT credit on duties paid, even if they were later determined to be in excess or not payable. These cases include:- Kesarwani Zarda Bhandar v. CCE, Thane-I: The Tribunal allowed CENVAT credit on service tax paid in excess.- Sterlite Industries (I) Ltd. v. CCE, Tirunelveli: The Tribunal held that credit is available even if the service tax was not initially payable.- Nahar Granites Ltd. v. CCE & ST, Ahmedabad: The Tribunal and subsequently the High Court of Gujarat upheld the admissibility of CENVAT credit on excess duty paid.- MDS Switchgear Ltd. v. CCE, Aurangabad: The Tribunal and the Supreme Court affirmed that duty paid, even if not required, entitles the recipient to CENVAT credit.The Tribunal concluded that the provisional assessment under Section 18 of the Customs Act is valid and the duty paid under such assessment is not merely a deposit. Therefore, the CENVAT credit on provisionally assessed bills of entry is admissible. The Tribunal upheld the adjudicating authority's order and dismissed the Revenue's appeal, affirming the respondent's entitlement to CENVAT credit on the duty paid under provisional assessment.