Cenvat cases whether eligible under Legacy Dispute Resolution Scheme

[SAKTHIVEL K]

Union Budget 2019 has introduced a Finance Bill 2019 in which in Chapter V it was stated Legacy Dispute Resolution Scheme (LDRS) will be applicable for excise duty and service tax related matters. Question is whether Cenvat related matters are covered under LDRS?

[KASTURI SETHI]

Yes. Whatever demand has been confirmed, dues are to be paid in cash and no further ITC is allowed on the amount of duty/ST deposited. Further we have to wait for enactment.

[SAKTHIVEL K]

Where does it flow from regulation that Cenvat was part of excise duty to cover under LDRS?

[KASTURI SETHI]

The assessees take Cenvat Credit of Central Excise duty paid on inputs/capital goods and take credit of Service Tax paid on input services. Duty paid through PLA and Cenvat Credit Account is at par. It has been held by CESTAT. The Department accepts it. What is most crucial is that threr must be correct PLA : CENVAT ratio. Value addition portion should come from PLA after adjusting credit on Capital Goods, Exported Goods/Services etc.

Duty paid character is same. Demand confirmed for reversal of credit is also demand of duty.

AI Summary

Legacy dispute resolution scheme eligibility for Cenvat clarified: cash payment required and no input tax credit allowed. Cenvat-related confirmed demands are treated as demands of duty eligible under the Legacy Dispute Resolution Scheme, requiring cash payment and prohibiting input tax credit on amounts deposited. This follows the principle that central excise and service-tax credits (Cenvat) and payments through the Principal Ledger Account share the same duty character; administrative and tribunal practice treats them as equivalent. Compliance necessitates a correct PLA:Cenvat ratio and that value-addition portions be met from PLA after adjustments for capital goods and exports, so that reversal of Cenvat credit is treated as a duty demand for Scheme purposes.