Cenvat credit of basic excise duty can be utilized for National Calamity Contingent Duty payment under Rule 3

CESTAT Ahmedabad dismissed Revenue's appeal regarding utilization of Cenvat credit of basic excise duty for payment of National Calamity Contingent Duty (NCCD). The tribunal held that Rule 3 of Cenvat Credit Rules, 2004 permits such utilization, following established precedents. Revenue's reliance on a HC judgment distinguishing NCCD as surcharge rather than excise duty was deemed irrelevant, as the rules specifically allow basic excise duty credit for NCCD payment. The original order permitting credit utilization was upheld as legal and correct.

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Issues Involved:
- Whether the respondent can utilize the Cenvat credit of basic excise duty for payment of National Calamity Contingent Duty (NCCD).

Detailed Analysis:

Issue: Utilization of Cenvat Credit of Basic Excise Duty for Payment of NCCD

Arguments by Revenue:
- The Revenue argued that basic excise duty cannot be utilized for payment of NCCD.
- They relied on the judgment of the Hon'ble High Court of Sikkim in the case of M/s. Unicorn Industries vs. Union of India, where it was held that NCCD is not an excise duty but a surcharge.
- Based on this, the Revenue contended that the order passed by the Commissioner (Appeals) was not legal and correct, and therefore needed to be set aside.

Arguments by Respondent:
- The Respondent argued that the issue has been settled in various judgments which allow the utilization of basic excise duty for payment of NCCD as per Rule 3 of the Cenvat Credit Rules, 2004.
- They cited several judgments including those from CESTAT Ahmedabad and the Hon'ble Gauhati High Court which supported their stance.

Tribunal's Findings:
- The Tribunal noted that the issue is no longer res-integra and has been settled in various judgments.
- In the case of CCE & ST, Silvassa and CCE & ST, Daman vs. Welspun Syntex Ltd. and M/s Wellknown Polyester Ltd, it was held that the appellant can utilize the Cenvat Credit of basic excise duty for payment of NCCD.
- The Tribunal found that the Revenue's reliance on the judgment of the Sikkim High Court in the case of Unicorn Industries vs. Union of India was misplaced because that case dealt with the issue of exemption from payment of NCCD, not the utilization of Cenvat Credit for payment of NCCD.
- The Tribunal also referred to the judgment of the Hon'ble Gauhati High Court in the case of Union of India vs. Kamakhya Cosmetics Pharmaceutical Pvt. Ltd., which held that payment of education cess can be made by utilizing Cenvat Credit of basic excise duty.
- The Tribunal further confirmed that Rule 3 of the Cenvat Credit Rules, 2004 allows the utilization of basic excise duty for payment of NCCD, and there is no restriction against such utilization.

Conclusion:
- The Tribunal upheld the orders passed by the lower authorities, stating that they were proper and legal.
- The appeals filed by the Revenue were dismissed, confirming that the respondent is entitled to utilize the Cenvat credit of basic excise duty for the payment of NCCD.

Final Pronouncement:
- The impugned orders were upheld, and the Revenue's appeals were dismissed.

Date of Pronouncement:
- The judgment was pronounced in the open court on 30.08.2024.

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