Cenvat credit on DEPB-debited customs duty depends on cash payment rules and possible retrospective application of later clarification.

Cenvat credit on additional customs duty under Section 3 of the Customs Tariff Act was treated as unavailable where the duty was discharged by debit in a DEPB pass book rather than by cash payment, because the Cenvat Credit Rules and the Exim Policy contemplated credit only for duty actually paid. A later Board clarification stated that duty discharged through DEPB debit should be regarded as duty paid and not as exempted goods, raising the question whether that clarification could apply retrospectively to prior imports. The Tribunal's view was sustained, but the adjudicating authority was directed to verify whether similar retrospective treatment had been extended to other importers and, if so, to grant the same relief.

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Issues: Whether the importer was entitled to Cenvat credit on additional customs duty under Section 3 of the Customs Tariff Act when such duty was adjusted by debit in the DEPB pass book, and whether the Board's later clarification could govern prior imports.

Analysis: The entitlement to Cenvat credit depended on the scheme under the Cenvat Credit Rules, the DEPB-based exemption mechanism, and the relevant Exim Policy position. The Court held that credit was not available merely because the additional duty component was adjusted through DEPB debit, since the policy and rules contemplated credit only when the duty was paid in cash. At the same time, the Court noticed the conflicting Board clarification stating that duty discharged through DEPB debit should be treated as duty paid and not as exempted goods. The matter therefore turned on whether that clarification was being applied retrospectively to similarly situated importers.

Conclusion: The Tribunal's view was upheld, but the matter was remanded to the adjudicating authority to verify whether the Board's clarification was being retrospectively applied to other importers; if so, similar relief was to be granted to the assessee, and if not, the assessee would not be entitled to the benefit.

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