CENVAT credit on concessional countervailing duty remains admissible; extended limitation and penalty need deliberate suppression or evasion intent.

CENVAT credit remains admissible on countervailing duty paid at a concessional rate under Notification No. 12/2012-Cus., because the levy under Section 3 of the Customs Tariff Act is relevant to the character of the duty, not the rate actually paid, and Rule 3(1)(vii) does not limit credit to tariff-rate duty. Denial of credit on the ground of a lower CVD rate was therefore unsustainable. Once credit was found admissible, the demand failed on merits; extended limitation and penalty also could not apply absent suppression, wilful misstatement, fraud, collusion, or intent to evade duty, particularly where the credit was disclosed in statutory records and the dispute was interpretational.

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Issues: (i) Whether CENVAT credit is admissible on Countervailing Duty paid at a concessional rate under Notification No. 12/2012-Cus., as amended. (ii) Whether the demand is sustainable on merits and limitation.

Issue (i): Whether CENVAT credit is admissible on Countervailing Duty paid at a concessional rate under Notification No. 12/2012-Cus., as amended.

Analysis: Section 3(1) of the Customs Tariff Act, 1975 levies additional duty of customs, and the expression "equivalent to duty of excise" refers to the measure of levy and not to a requirement of identical rate. Rule 3(1)(vii) of the CENVAT Credit Rules, 2004 permits credit of the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 without restricting credit to duty paid at the tariff rate. The concessional rate of duty did not alter the character of the levy, and the issue was covered by consistent precedent holding that denial of credit merely because the CVD was paid at 1% or 2% was not legally sustainable.

Conclusion: CENVAT credit on the concessional CVD was admissible, and the denial of credit was not sustainable in law, in favour of the assessee.

Issue (ii): Whether the demand is sustainable on merits and limitation.

Analysis: Once credit was held admissible, the foundation of the demand failed. Independently, invocation of the extended period under Section 11A of the Central Excise Act, 1944 required suppression of facts, wilful misstatement, fraud, or collusion with intent to evade duty. The availment of credit was reflected in the statutory records, the dispute was interpretational, and no material showed deliberate suppression or intent to evade duty. In such circumstances, penalty under Section 11AC of the Central Excise Act, 1944 also could not survive.

Conclusion: The demand was not sustainable on merits or limitation, and the extended period was wrongly invoked, in favour of the assessee.

Final Conclusion: The impugned demand, interest, and penalty were set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: Credit eligibility under the CENVAT scheme depends on the statutory character of the levy under Section 3 of the Customs Tariff Act, 1975, and concessional rate of CVD does not, by itself, disentitle the assessee from credit; extended limitation and penalty require deliberate suppression or intent to evade duty.

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