Tribunal allows Cenvat credit on imported steam coal CVD, rejecting Revenue's challenge

The Tribunal ruled in favor of the assessees, allowing them to claim Cenvat credit on the 2% Countervailing Duty (CVD) paid on imported steam coal under Notification No. 12/2012-Cus. The Tribunal held that the Cenvat credit was admissible as there was no bar in respect of CVD paid under Customs Notification No. 12/2012-Cus, rejecting the Revenue's argument that the duty paid did not align with specified rates under the Central Excise Tariff Act, 1985. The Tribunal clarified that the restriction in Rule 3(1)(i) of the Cenvat Credit Rules did not apply to CVD paid under the Customs notification, leading to the dismissal of the Revenue's appeals.

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Issues Involved:
1. Admissibility of Cenvat credit of 2% Countervailing Duty (CVD) paid on imported steam coal.
2. Interpretation of Rule 3 of the Cenvat Credit Rules, 2004.
3. Applicability of various notifications and previous judgments.

Issue-Wise Detailed Analysis:

1. Admissibility of Cenvat Credit of 2% CVD:
The core issue in these appeals is whether the Cenvat credit of 2% CVD paid on the import of steam coal is admissible to the assessee/respondents under Notification No. 12/2012-Cus dated 17/03/2012, as amended. The Revenue contends that the Cenvat credit is not available to the importer/manufacturer as the duty paid does not align with the specified rates under the Central Excise Tariff Act, 1985. The Tribunal, however, found that there is no bar in respect of CVD paid under Customs Notification No. 12/2012-Cus, thereby allowing the Cenvat credit.

2. Interpretation of Rule 3 of the Cenvat Credit Rules, 2004:
The Tribunal examined Rule 3 of the Cenvat Credit Rules, 2004, which allows manufacturers or service providers to take credit of various duties, including the additional duty leviable under Section 3 of the Customs Tariff Act. The Revenue's argument hinged on the proviso to Rule 3(1)(i), which restricts Cenvat credit for goods exempted under certain Central Excise notifications. However, the Tribunal clarified that this restriction does not apply to CVD paid under the Customs Notification No. 12/2012-Cus. The Tribunal noted that the Commissioner mixed up Rule 3(1)(i) and Rule 3(1)(vii), leading to an erroneous denial of Cenvat credit.

3. Applicability of Notifications and Previous Judgments:
The Tribunal referred to several precedents to support its decision. It highlighted that the issue is no longer res integra, citing cases like M/s Hindustan Zinc Ltd vs. Commissioner, CGST, and others, where it was consistently held that Cenvat credit on 2% CVD paid under Customs Notification No. 12/2012-Cus is admissible. The Tribunal also distinguished the Gujarat High Court's decision in Lonsenkiri Chemicals Industries, noting that it involved different factual circumstances where the assessee availed benefits under specific Central Excise notifications.

Conclusion:
The Tribunal dismissed the Revenue's appeals, affirming that the assessees are entitled to Cenvat credit on the 2% CVD paid under Notification No. 12/2012-Cus. The Tribunal emphasized that the restriction in Rule 3(1)(i) of the Cenvat Credit Rules does not apply to CVD paid under the said Customs notification. The consistent view taken by various benches of the Tribunal and the lack of any bar in Rule 3(1)(vii) for CVD paid under Customs Notification No. 12/2012-Cus formed the basis of this decision. The Tribunal also found no grounds for invoking the extended period of limitation, as the issue involved was purely interpretative, and there was no suppression of facts by the assessees.

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