TaxTMI 
TaxTMI 
2020 (10) TMI 1032
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....r dated September 4, 2019 passed by the Commissioner (Appeals), Central Excise and Central Goods and Service Tax, Jodhpur, the Commissioner (Appeals) by which the order dated March 18, 2019 passed by the Joint Commissioner disallowing CENVAT credit of Rs. 1,83,23,753/- with interest and penalty has been set aside and the appeal has been allowed. In this appeal the respondent is M/s Ultratech Cement Limited, Chittorgarh, Ultratech Cement. 3. Hindustan Zinc is engaged in the manufacture of zinc and lead concentrates falling under Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985, the Excise Tariff Act and has been availing the facility of CENVAT credit on inputs, capital goods and input services under the CENVAT Credit Rules, 2004, the CENVAT Credit Rules. For manufacturing the final products, Hindustan Zinc consumed power generated from its captive thermal plant wherein steam coal / steam non-coking coal falling under Chapter Heading 27.01 of the Customs Tariff Act, 1975, the Customs Tariff Act is used as input. During the relevant period, Hindustan Zinc paid additional duty of customs in terms of section 3(1) of the Customs Tariff Act on the importation of ....
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....ed a rate of 2% ad valorem. It also availed CENVAT credit of the additional duty of customs so paid under rule 3 (1)(vii) of the CENVAT Credit Rules. However, a show cause notice dated October 27, 2017 was issued, proposing to disallow the CENVAT credit amounting to Rs. 1,83,23,753/- for the reason that CENVAT credit of duty specified in the First Schedule to the Excise Tariff Act is admissible under rule 3 of the CENVAT Credit Rules and so additional duty of customs equal to duty of excise leviable under the Excise Tariff Act read with any other notification is only admissible for CENVAT credit. The additional duty of Customs paid @ 2% was not the duty of excise as specified in the Excise Tariff Act and so CENVAT credit of the additional duty of customs paid under the Customs Notification dated March 17, 2012 had wrongly been availed by the Ultratech. Further, the benefit of concessional rate of excise duty under the Notification dated March, 2017 was available in respect of coal subject to the condition that no credit was availed under the CENVAT Credit Rules. The extended period of limitation was also invoked. The reply filed by Ultratech Cement did not convince the Joint Commis....
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....e extended period of limitation was not invokable under section 11A(4) of the Customs Act; and (v) Neither penalty could be imposed nor interest could be recovered. 7. Shri O.P. Bisht learned Authorized Representative of the Department has made the following submissions:- (i) The CENVAT credit on duty paid on Coal is allowed to be taken in respect of duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under Excise Act. Though the additional duty of customs cannot be treated as duty of excise per se, but as per clause (vii) of sub-rule (1) of rule 3 of CENVAT Credit Rules, the CENVAT credit of the additional duty leviable under section 3(1) of the Customs Tariff Act is allowed equivalent to the duty of excise specified in clause (i) to (via) of sub-rule (1) of rule 3 of CENVAT Credit Rules; (ii) It is, therefore, clear that the eligibility of credit of additional duty of customs under rule 3(1)(vii) is not determined with reference to the additional duty paid under the Notification dated March 17, 2012, but is determined only with reference to the excise duty specified under clauses (i), (ii), (iii), (iv), (v), (vi) and (vi....
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....n Zinc, and the same is reproduced below: 11. "Whereas, from the above, it transpires that the Cenvat credit on the coal imported by the assessee is available to the manufacturer under Cenvat Credit Rules, 2004 subject to the satisfaction of the conditions laid in Rule 3 of the Cenvat Credit Rules, 2004. The rule 3(1)(i) of Cenvat Credit Rules, 2004 speaks that the Cenvat Credit of duty of excise as specified in the first schedule to the Central Excise Tariff Act, 1985 read with any Notification issued under the Central Excise Act, 1944 is available to the assessee. Further, from the legal provisions as contained in Rule 3(1)(vii) of the Cenvat Credit Rules, 2004, it transpires that the assessee is eligible to take Cenvat Credit of the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 equivalent to the duty of excise specified under clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (viia) of the Rule 3 ibid. The duty of excise on the coal imported by the assessee as specified in the first schedule to the Central Excise Tariff Act, 1985 is 6% and the effective rate is 1% or 2% vide Notification No. 12/2012-CE dated 17.03.2012, as amended, subject ....
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....additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of Excise specified under clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (via). Clause (vii) is not independent of clause(i) and thus the proviso provided under clause (i) is also applicable to credit of CVD under clause (vii). If there was any other intention of Legislature they would not have specifically mentioned "equivalent to the duty of Excise specified under clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (via)". Thus, the notices are not legible to avail the credit of CVD equivalent to duty of excise if it is not eligible in clause (i). Any other meaning would be unfair for the local coal producers vis a vis imported coal, as if stand taken by notices is accepted, credit would not be available on indigenously procured coal but would be available on imported coal. This could never be the intention of legislature and therefore I do not find any substance or basis in the contention of the notices." 12. It would be appropriate to reproduce rule 3 of the CENVAT Credit Rules and it is as follows: "RULE 3. CENVAT credit- (1) A manufacturer or producer of fi....
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....Commissioner has mixed up rule 3(1)(i) and rule 3(1)(vii) of rule 3 of the CENVAT Credit Rules. It is for this reason that the conditions specified in rule 3(1)(i) have also been imported into rule 3 (1)(vii) of the CENVAT Credit Rules. In the first instance, Hindustan Zinc had not paid duty of excise specified in the First Schedule of the Excise Tariff Act, nor it had availed the benefit of the Central Excise Notification dated March 1, 2011 or that specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Central Excise Notification dated March 17, 2012 had been availed. In fact, Hindustan Zinc had paid additional duty of customs by availing the benefit under serial number 122A/123 of the Customs Notification dated March 17, 2012. It is because of this misreading of rule 3(1) of the CENVAT Credit Rules that led the Commissioner to commit an error. 15. The Regional Advisory Committee of Hyderabad Zone, in its meeting held on February 9, 2015 considered this very issue at point No. 1 and concluded that CENVAT credit of additional duty of customs paid on imported goods under Customs Notification dated March 17, 2013 (and not under Central Excise....
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....nder the said notification, there is no bar for availment of cenvat credit in terms of Rule 3 (vii) of Cenvat Credit Rules, 2004. Therefore, I hold that authorities below has applied wrong provision to deny Cenvat credit to the appellant. Therefore, Cenvat credit cannot be denied to the appellant. In that circumstances, I hold that the appellant has correctly availed the Cenvat credit of CVD paid on imported coal in terms of Rule 3(7) of Cenvat Credit Rules, 2004. Further, I find that the show cause notice has been issued by invoking extended period of limitation. As the Revenue itself has applied wrong provisions of law, therefore, the extended period of limitation is not invokable. In that circumstances, the impugned order is set aside." 17. This decision of the Tribunal was subsequently followed by the Tribunal in Jaypee Sidhi Cement Plant and the relevant portion of the decision is reproduced below : "4. It is submitted on behalf of the appellant that adjudicating authority below has wrongly made applicable the Notification No. 12/2012-C.E., dated 17-3-2012 to the facts and circumstances on a wrong presumption that the levy of CVD in dispute is since equal to the Ex....
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....es the appellants to avail the Cenvat credit in the given circumstances. The said Rule itself clarifies that the Cenvat credit of duty of excise is not allowed to be taken when paid on any goods specified under S. Nos. 67 and 128 of Excise Notification No. 12/2012, dated 17-3-2012. Admittedly, the notification relied upon by the department for denying the impugned benefit to the appellant is Customs Notification No. 12/2012, dated 17-3-2012. The restriction of Rule 3 is not applicable to the said notification. Above all, the Hon'ble Supreme Court in the case of SRF Ltd. v. CC Chennai (2015 (318) E.L.T. 607 (S.C.)) has held that Excise Notification No. 12/2012 is applicable only in respect of any digged or manufactured coal and not in respect of imported coal. The import whereof is allowed to have exempted rate of CVD vide Customs Notification No. 12/2012-Cus. 9. In view of the entire above discussion, we are of the firm opinion that the adjudicating authority has committed a legal error while denying the benefit of reduced CVD on imported coal while placing reliance upon the Excise notification for manufacture of coal." (emphasis supplied) 18. The same view ....
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....T credit arose. The Revenue authorities and the Tribunal held that by virtue of proviso to rule 3(1) of CENVAT credit Rules, 2004, ('the Rules' for short) in view of the benefit availed by the assessee and the said exemption notifications, CENVAT credit would not be allowable. It is this view which the assessee has challenged before us. ******** 3. It is not in dispute that the assessee has availed of the benefit of exemption notification 1 of 2011 and also the benefits under Sr. 67 and 128 of exemption notification 12 of 2012. In that view of the matter, the above noted proviso of the Rules, would disentitle the assessee from claiming CENVAT credit. Counsel for the assessee however submitted that this proviso refers to CENVAT credit of "such duty of excise". In the present case, what the assessee has paid was the countervailing duty. The same may have been computed in terms of excise duty payable on local manufacturers, nevertheless, the same cannot be treated as duty of excise perse. He however candidly a greed that facility for getting CENVAT credit in the case of the present assessee flows from rule 3 of the Rules. As per subrule (1) of rule 3, a manufacturer or produc....