Cenvat credit on settlement payment denied where the amount was not proved to be countervailing duty actually paid.

Cenvat credit was denied because the assessee failed to show that the amount paid under the Settlement Commission order represented countervailing duty actually assessed and paid on imports under Notification No. 79/95-Cus. The record distinguished imports where basic customs duty and CVD were exempt from those where only basic customs duty was exempt, and the settlement computation did not establish any CVD component for the advance licences in question. Credit cannot be claimed merely because the sum formed part of an overall settlement payment, so the denial of credit was upheld.

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Issues: Whether Cenvat credit of Rs. 70.67 lakhs was admissible when the amount paid by the appellant under the Settlement Commission order was claimed to represent countervailing duty on imports made under Notification No. 79/95-Cus.

Analysis: The amount in dispute arose from imports covered by advance licences and was examined in the light of the Settlement Commission's final order under Section 127C(7) of the Customs Act, 1962. The record showed that, for imports under Notification No. 30/97-Cus, both basic customs duty and CVD were exempt, whereas under Notification No. 79/95-Cus only basic customs duty was exempt. On the facts recorded by the lower authority and accepted by the Tribunal, the Settlement Commission's computation did not reflect any CVD component as having been assessed or paid for the 23 advance licences covered by Notification No. 79/95-Cus. The amount of Rs. 70.67 lakhs was therefore not shown to be payment of CVD, and credit could not be allowed merely because it formed part of the overall settlement payment.

Conclusion: The claim for Cenvat credit of Rs. 70.67 lakhs was not admissible and the denial of credit was upheld, in favour of Revenue.

Ratio Decidendi: Cenvat credit is allowable only to the extent the disputed sum is shown to be duty actually payable and paid; where the settlement record does not establish that the amount represents CVD, credit cannot be claimed on that payment.

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