2023 (12) TMI 307 - AT - Central Excise

Tribunal Affirms Cenvat Credit on Demurrage Charges, Rejects Customs Duty Demand, Sets Aside Prior Order.

Kanoria Chemicals & Industries Ltd Versus Commissioner of Central Tax Visakhapatnam - GST

Kanoria Chemicals & Industries Ltd Versus Commissioner of Central Tax Visakhapatnam - GST - TMI Issues:The issue involved is whether the Appellant has rightly taken Cenvat credit after payment of Additional Customs Duty (ACD) & SAD on the demurrage charges, at the insistence of Revenue.Judgment Details:The Appellant, engaged in manufacturing chemicals, imported raw materials incurring demurrage charges during clearance. Initially, they paid Basic Customs Duty (BCD) plus ACD plus SAD and took credit as per rules. At the Revenue's insistence, they paid BCD, ACD & SAD on demurrage charges and took Cenvat credit. Subsequently, after a show cause notice (SCN) in 2019, the Appellant was required to explain why Cenvat credit on challans for duty on demurrage charges should not be disallowed. The Appellant contested the SCN, but the amount was confirmed with a penalty.The Commissioner (Appeals) upheld the disallowance of credit, leading the Appellant to appeal to the Tribunal. The Appellant argued that credit was taken based on eligible documents under Rule 9(1)(e) and Rule 9(1)(c) allowed credit on bill of entry. The Appellant cited various judgments to support their case. The issue was deemed interpretational, with the Appellant requesting the Appeal be allowed.After considering the contentions, the Tribunal found the demand of Customs Duty on demurrage to be misconceived. It was held that the Appellant rightfully took Cenvat credit based on challans and bills of entry, with no fraudulent intent. The Tribunal set aside the Impugned Order, allowing the Appeal with consequential benefits in accordance with the law.