Cenvat credit allowed on Bills of Entry where duty paid under protest during provisional assessment under Rule 9(1) CCR 2004

CESTAT Chennai allowed the appeal regarding wrongful availment of cenvat credit on Bills of Entry where duty was paid under protest during provisional assessment. The Tribunal held that Rule 9(1) of CCR 2004 does not bar credit availment during provisional assessment, and there is no restriction when duty is paid under protest, citing Monarch Catalyst Pvt. Ltd. precedent. On limitation, the Tribunal found no suppression of facts as the Department was aware of the protest payment in 2016, but issued show cause notice only in 2019, failing to establish grounds for extended period invocation. The impugned order was set aside.

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Issues Involved:
1. Eligibility to avail Cenvat credit during provisional assessment.
2. Applicability of extended period for issuing show cause notice.

Issue-wise Detailed Analysis:

1. Eligibility to avail Cenvat credit during provisional assessment:

The main issue to be decided was whether the appellant is eligible to avail credit when the duty is paid during provisional assessment under protest. The appellant had imported iron ore and classified them under CETH 2601 for which the applicable CVD was NIL. The Department objected to the classification, asserting that the imported goods are iron ore concentrates and would attract CVD @ 12%. Consequently, the appellant paid the duty under protest and sought to avail Cenvat credit.

The Tribunal referred to Rule 9(1) of the Cenvat Credit Rules, 2004, which does not bar the availment of credit even if duty is paid during provisional assessment. The Tribunal also relied on several precedents, including the case of Monarch Catalyst Pvt. Ltd. Vs CCE Thane-I, where it was held that credit is eligible even if the assessment is provisional. The Tribunal emphasized that under Rule 9(1) of the Cenvat Credit Rules, the main document mentioned for availing credit is the "Bill of Entry," and it does not specify whether the Bill of Entry should be provisionally or finally assessed. The Customs Act, 1962, also supports this view by including provisional assessment under the definition of assessment.

Further, similar views were upheld in cases like Hindalco Industries Ltd. and Jayaswals NECO Limited, where it was concluded that the credit is admissible even if the duty is paid under protest or during provisional assessment. The Tribunal concluded that there are no grounds for disallowing credit and held that the appellant is eligible to avail credit.

2. Applicability of extended period for issuing show cause notice:

The appellant argued that the show cause notice issued on 30.07.2019 was beyond the normal period and that there was no suppression of facts to justify the invocation of the extended period. The appellant had availed the credit on 30.09.2016, and the Department was well aware of the payment of duty under protest in 2016 itself, as evidenced by a letter from the Department dated 01.07.2016.

The Tribunal noted that the show cause notice did not allege suppression of facts with intent to evade payment of duty. The fact that the duty was paid under protest was within the knowledge of the Department. Therefore, the Tribunal found that the Department failed to establish grounds for invoking the extended period. The issue of limitation was answered in favor of the appellant.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal with consequential relief if any. The Tribunal held that the appellant is eligible to avail Cenvat credit even if the duty is paid during provisional assessment under protest and that the extended period for issuing the show cause notice was not applicable in this case.

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