2017 (7) TMI 19

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....ts received from their 100% EOU unit (M/s HZL, Hydro1) as per provisions of the Cenvat Credit Rules, 2004. 2. During the relevant period, during the scrutiny of records of the Appellant, it was observed that the Appellant had availed excess Cenvat credit on inputs procured from a 100% EOU amounting to Rs. 67,15,458/-. 3. Thereafter, the Appellant was issued with Show Cause Notice dated 12.10.2012 inter alia, on the following grounds: (i) That in terms of Sl. No. 2 of Notification No.23/2003-CE dated 31.03.2003, as amended vide Notification No.48/2008-CE dated 05.12.2008, Cenvat Credit is restricted to an amount calculated as per formula specified under Rule 3(7)(a) of the Cenvat Credit Rules; (ii) Rule 3(7) was amended vide Noti....

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....67,231/-, still balance of Rs. 38,48,227/- is recoverable. 5. Being aggrieved by the impugned order, the Appellant has filed the present appeal against the impugned order, claiming that they were entitled to the credit of SAD as per Rule 3(7). 6. The dispute in the present case is whether additional duty paid under Section 3(5) i.e. SAD is includible in CVD in terms of Rule 3(7) of the Credit Rules and credit of same can be availed on inputs received from a 100% EOU unit. 7. The learned Commissioner in the impugned order has held that credit of SAD levied under Section 3(5) of the Customs Tariff Act is part of CVD and can be availed as Cenvat credit only with effect from 07.09.2009 i.e. the date of amendment in Rule 3(7) vide Notif....

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.... Section 3(1) and Section 3(5) of the Customs Tariff Act, 1975. Under the circumstances, there is no warrant to treat the term CVD referred to in Rule 3(7) of the Cenvat Credit Rules as applicable only to additional duty leviable under Section 3(1) of the Customs Tariff Act. The term CVD has not been specifically defined in the Cenvat Credit Rules, but it has been explained that "BCD & CVD denote ad valorem rates in per cent, of basic customs duty and additional duty of customs leviable". Therefore, taking into account that from 1-3-05, the additional duty levied under Section 3(5) has also been made eligible for credit, it would be proper to hold that the term CVD referred to in the formula would refer to both varieties of additional dutie....