TaxTMI 
TaxTMI 
2021 (12) TMI 581
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies, which are allowed to be eligible as Cenvat Credit. The additional duty of customs is a duty equal to duty of excise for the time being leviable on like article, if produced or manufactured in India. Clause (vii) of sub Rule (1) of Rule 3 of Cenvat Credit Rules, 2004 permits availing Cenvat credit of additional duty leviable under Section 3 of the Customs Tariff Act (commonly known as CVD) subject to the condition that the CVD must be equivalent to the duty of excise specified under clauses (i), (i), (i), (iv), (v), (vi) and (via) of the said rules. The term "equivalent" has greater significance that in any case, if the CVD paid is not equivalent to the duty of excise as specified under clauses (i), (i), (i), (iv). (v), (vi) and (via) of Rule 3(1) of Cenvat Credit Rules, 2004, credit thereof is not allowed to the manufacturer. It was further contended in the show cause notices that appellant is eligible for CVD credit paid is the same which is equal to duty of excise specified under Central Excise Tariff heading 2701 i.e. 5%/6% ad valorem as per Central Excise Tariff Act, 1985. Since the appellant has not paid duty at the Central Excise tariff rates and have paid duty less than....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the duty levied on the goods. Further, Cenvat credit was taken as per Rule 3(vii) of Cenvat Credit Rules as CVD was levied as per Section 3(1) of Customs Tariff Act which is equivalent in nature of the excise duty. The effective rate of duty was further reduced by the Notification No. 12/2012-Cus but the nature of the duty was still offset the levy of Central Excise duty. He submits that the issue is no longer res-integra as various benches of the Tribunal, on the same issue has allowed Cenvat credit in respect of concessional CVD paid under Notification No. 12/2012-Cus. 3. He further submits that demand is clearly time-barred as the extended period of limitation was invoked. The issue relates to the interpretation of Cenvat provisions and Customs Tariff Act and for the same issue, various cases were booked by the department which is evident from the judgments given on the same issue. Therefore, no malafide intention or suppression of facts with intention to evade duty is attributable to the appellants. The availment of Cenvat credit having been declared in the monthly ER-1 returns, appellant have not mis-declared or suppressed any fact from the department. Therefore, the demand f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication No. 12/2012-Cus dated 17.03.2012. Only on the ground that the appellant have not paid CVD equivalent to the excise duty leviable on the Coal specified under clauses (i), (ii), (iii), (iv), (v), (vi) and (via) and applied clause (vii) of Rule 3 of Cenvat Credit Rules. The Revenue's contention is incorrect that as per clause (vii) of Rule 3(1) additional duty leviable under Customs Tariff Act is equivalent to duty of excise duty specified under clause (i) of Rule 3(1) is paid. Rule 3 of the Cenvat Credit Rules, 2004 is reproduced as under:- Rule -3 (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act : PROVIDED that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods - (a) in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 is availed; or (b) specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Notification No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty of Customs under section 3 (1) of the Customs Tariff Act, after availing the benefit of the Customs Notification dated March 17, 2012 and that they also availed CENVAT credit of the additional duty of customs so paid under rule 3(1)(vii) of the CENVAT Credit Rules. This availment of CENVAT credit has been denied to them for the reason that 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 have been wrongly availed. 10. It would, therefore, be appropriate to reproduce the relevant portion of the show cause notice issued by the Department to Hindustan 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, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y have taken credit of CVD as applicable under S.No.122A or 123 of 12/2012-Customs dated 17.12.2012 and not S. No. 67 of notification 12/2012-CE dated 17.03.2012. I do not agree with their contention because of the specific wording of the clause (i) and (vii) of sub rule 3(1) of CCR, 2004. From the perusal of the said sub rule it is clear that credit of the CVD paid by assessee is admissible as Cenvat credit. However, such right to availment of credit is no unfettered. The said credit available is equivalent to the duty of Excise specified under clauses (i), (ii), (viii), (iv), (v), (vi), (vii) and (via). The wording of this clause clearly specifies that it allows the credit only of the 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icates that a provider of output service shall be allowed to take CENVAT credit of the duty of excise specified in the First Schedule to the Excise Tariff Act specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act subject to the two conditions mentioned in proviso (a) & (b). However, rule 3(1)(vii) provides that a provider of output service shall be allowed to take credit of the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v), (vi) and (via). 14. The 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e no bar for availment of CENVAT credit in terms of rule 3(vii) of the CENVAT Credit Rules. The relevant paragraph of the decision is reproduced below: "5 On careful consideration of the submissions made by both the sides, I find that the sole reason to deny Cenvat credit to the appellant is that the authorities below has taken into consideration Notification No. 12/2012-CE., dated 17-3-2012. The authorities below have not considering the Notification No. 12/2012-Cus., dated 17-3-2012. If same is taken into consideration and duty paid under 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 pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the imported coal. Perusal of Excise Notification No. 67 further reveals that no such condition is applicable in case of import of coal. 8. The narrow compass of the adjudication, therefore, remains as to whether under Customs notification against S. No. 67 i.e., while importing the coal, the appellants were entitled to avail the Cenvat credit on the amount of CVD paid. The Cenvat credit is applicable as per Rule 3(1) of the Cenvat Credit Rules, 2004. Clause 7 thereof entitles 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Gujarat High Court is reproduced below: "2. The appellant imports coal on which ordinarily countervailing duty in the nature of excise duty would be payable. However, by virtue of notifications 1 of 2011 dated 01.03.2011 and Sr. No. 67 and 128 of exemption notification 12 of 2012 dated 17.03.2012, the assessee would either pay duty at the reduced rate or Nil rate of duty. In this context, the question of allowing the assessee to claim CENVAT 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 "s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Commissioner (Appeals), in the matter of Ultratech Cement, after considering the provisions of rule 3 of the CENVAT Credit Rules and the decision of the Tribunal in Hindalco Industries Limited and the Minutes of the Meeting of the Regional Advisory Committee of Hyderabad Zone held on February 9, 2015, held that Ultratech Cement was justified in taking the CENVAT credit. The Commissioner (Appeals) also found that the judgment of the Gujarat High Court in Lonsenkiri Chemicals Industries would not be applicable to the facts of the case and in this connection placed reliance on the decision of the Tribunal in Aarti Industries Limited. 24. For the reasons also discussed above, there is no error in the order passed the Commissioner (Appeals) in the matter of Ultratech Cement. 25. Thus, for all the reasons stated above, Excise Appeal No. 52928 of 2019 filed by Hindustan Zinc is allowed and the order dated September 24, 2019 passed by the Commissioner is set aside. Excise Appeal No. 52774 of 2019 filed by the Commissioner is dismissed." 7. The above decision of the Tribunal has considered various decisions given by the different benches and also distinguished the decisions relied up....