cenvat credit of customs duty paid due to non fulfillment of export obligation in respect of capital goods imported under EPCG on 06/2012.

[bk r]

Respected sir

Sir, Capital goods were imported in 06/2012 under EPCG scheme without payment of BCD,CVD,SAD etc . but we could not fulfill the export obligation and DGFT directed us to pay the Customs duty, CVD and SAD before cancellation of the licence . We pay the same alongwith interest in june 2017. We availed 50% cenvat credit in the month of June 2017 and remaining 50% of credit was availed in July 2017 after GST. Now the department is denying the cenvat credit on the following grounds:

1. THE CENVAT CREDIT IS NOT ADMISSIBLE AFTER ONE YEAR FROM THE DATE OF ISSUANCE OF THE DOCUMENT AS PER THE CENVAT CREDIT RULES 2004. IN OUR CASE DOCUMENT I.E. BILL OF ENTRY IS OF JUNE 2012 .

2.WE REQUESTED THE DEPARTMENT TO CONSIDER THE DUTY PAYMENT DOCUMENT I.E. CHALLA N AS SUPPLEMENTARY INVOICE BUT DEPARTMENT IS NOT ACCEPTING IT AS SUPPLEMENATRY INVOICE . THEIR PLEA IS THAT SUPPLIMENTARY INVOICES IS FOR ADDITION AMOUNT OF ADDITIONAL DUTY OF CUSTOMS/eXCISE AND IN THIS CASE THE CHALLAN IS NOT FOR THE ADDITIONAL DUTY IT IS FOR THE INITIAL DUTY and it does not fall under the supplimentray invoice

3. THAT WE PAID THE DUTY DUE TO NON FULFILL OF THE EXPORT OBLIGATION ON THE DIRECTION OF THE DGFT AND NOT SUOMOTO THEREFORE THE CENVAT CREDIT IN R/O GOODS IMPORTED IN jUNE 2012 IS NOT ADMISSIBLE.

please guide whether the department contention is correct and they can deny the cenvat credit on the above said grounds.

[KASTURI SETHI]

You can get the relief through litigation only. I am of the view that you can win the case. Case laws can be traced out in your favour. Date of payment and date of issuance of directions by DGFT also have legal force. You will have to fight the case legally.

[YAGAY andSUN]

In our view CENVAT credit is not allowed in such scenarios since export obligation was not fulfilled and duty was paid as per the provisions of FTP as penalty actions.

AI Summary

Company Denied CENVAT Credit for Late Duty Payment; Export Obligations Unmet Under EPCG Scheme; Cites CENVAT Credit Rules 2004. A company imported capital goods under the EPCG scheme in June 2012 without paying customs duties but failed to meet export obligations. Consequently, they paid the duties and interest in June 2017 and claimed CENVAT credit, which the department denied. The denial was based on the CENVAT Credit Rules 2004, which restrict credit claims to one year from the document's issuance date and the non-acceptance of the duty payment document as a supplementary invoice. One respondent suggested litigation as a potential remedy, while another agreed with the department's position, citing non-fulfillment of export obligations as grounds for denial.