Tribunal Rulings: CENVAT Credit Admissible for Customs Duty. Ultratech Cement Appeal Upheld

The Tribunal allowed the appeal filed by Hindustan Zinc, setting aside the Commissioner's order and confirming the admissibility of CENVAT credit for additional duty of customs paid at 2% ad valorem under rule 3(1)(vii). The Tribunal dismissed the Commissioner's appeal against Ultratech Cement, upholding the Commissioner (Appeals) decision that the credit availed was justified, and penalty and interest were not applicable.

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Issues Involved:
1. Whether CENVAT credit of additional duty of customs paid at 2% ad valorem is admissible under rule 3(1)(vii) of the CENVAT Credit Rules.
2. Whether the conditions specified in rule 3(1)(i) of the CENVAT Credit Rules are applicable to rule 3(1)(vii).
3. Whether the extended period of limitation under section 11A(4) of the Customs Act is invokable.
4. Whether penalty and interest could be imposed.

Detailed Analysis:

Issue 1: Admissibility of CENVAT Credit of Additional Duty of Customs
Hindustan Zinc and Ultratech Cement both paid additional duty of customs at 2% ad valorem under section 3(1) of the Customs Tariff Act and availed CENVAT credit under rule 3(1)(vii) of the CENVAT Credit Rules. The Department issued show cause notices proposing to disallow this credit, arguing that the additional duty of customs paid at 2% was not the duty of excise specified in the Excise Tariff Act. However, the Tribunal noted that rule 3(1)(vii) allows credit of additional duty of customs equivalent to the duty of excise specified under various clauses, and this rule does not import the conditions of rule 3(1)(i). The Tribunal relied on previous decisions, including Hindalco Industries Ltd., Jaypee Sidhi Cement Plant, and Asahi Songwon Colors Limited, which supported the admissibility of such CENVAT credit. Thus, the Tribunal concluded that the credit was correctly availed.

Issue 2: Applicability of Conditions in Rule 3(1)(i) to Rule 3(1)(vii)
The Commissioner had mixed up the provisions of rule 3(1)(i) and rule 3(1)(vii), erroneously applying the conditions of rule 3(1)(i) to rule 3(1)(vii). The Tribunal clarified that Hindustan Zinc had paid additional duty of customs under the Customs Notification and not under the Central Excise Notification. Therefore, the conditions specified in rule 3(1)(i) did not apply to the credit availed under rule 3(1)(vii).

Issue 3: Extended Period of Limitation
The Tribunal found that the extended period of limitation under section 11A(4) of the Customs Act was not invokable. The Tribunal noted that the Department had applied the wrong provisions of law, which led to the erroneous denial of credit. Therefore, the extended period could not be justified.

Issue 4: Imposition of Penalty and Interest
Given that the credit was correctly availed and the extended period of limitation was not applicable, the Tribunal held that neither penalty could be imposed nor interest could be recovered.

Conclusion:
The Tribunal allowed the appeal filed by Hindustan Zinc, setting aside the order dated September 24, 2019, passed by the Commissioner. The Tribunal dismissed the appeal filed by the Commissioner against Ultratech Cement, upholding the order of the Commissioner (Appeals) which had allowed the CENVAT credit. The Tribunal found no error in the order passed by the Commissioner (Appeals) in the matter of Ultratech Cement and concluded that the credit availed was justified.

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