Cenvat credit for special additional customs duty passed through the supply chain is admissible under the credit rules.

Cenvat credit is available for special additional duty of customs passed on by a supplier of inputs to the recipient. Rule 3(1)(viia) of the Cenvat Credit Rules, 2004 permits credit of the additional duty leviable under section 3(5) of the Customs Tariff Act, and entitlement does not depend on whether the duty was paid by the importer or another supplier in the chain, provided the duty has been suffered on the inputs and is otherwise eligible for credit. On that basis, the credit was held admissible and the denial was set aside.

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Issues: Whether Cenvat credit is admissible in respect of special additional duty of customs paid by the supplier of inputs and passed on to the recipient.

Analysis: Rule 3(1)(viia) of the Cenvat Credit Rules, 2004 expressly permits credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act. The entitlement does not depend on whether the special additional duty was paid by the importer or by some other supplier in the chain, so long as the duty has been suffered on the inputs and is otherwise eligible for credit.

Conclusion: Cenvat credit of special additional duty of customs was held to be admissible to the appellant, and the denial of credit was set aside.

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