03 July 2011
Whether Cenvat Credit can be availed on CVD on imported inputs by debiting DEPB or through DEPB scrip.Pl: resolve keeping in view CESTAT LB judgement in Essar Steel VS CCE (2004).
04 July 2011
As per Para 4.3.5 refers to the export benefit that can be availed on the export goods. The heading of para 4.3.5 is “Applicability of Drawback”. The para clearly refers of export benefits, which can be availed when goods are exported under DEPB scheme. The term “CENVAT” used is para 4.3.5 clearly refers to the Cenvat as export benefit in lieu of drawback. The para is not relevant with respect to the goods, which are not “export goods”, and inputs used “not in the production of Export goods”. The above para has no relevance when the product is not being exported or the assessee is claiming no export benefit. Thus when goods are not being exported this para is not applicable and hence on the basis of this para cenvat credit cannot be denied. The last line of the para have been deleted by the DGFT Notification No.28 (RE-2003)/2002-07, dated 28.01.2004 [2004 (164) ELT E1]. It is submitted that the said notification is clarificatory in nature and hence applicable retrospectively. The deletion of the last line of the para clearly shows that denying Cenvat credit on the basis of that para was not the legislative intention at any point of time.
Hon’ble Tribunal in Poly Hose India Pvt. Ltd. V/s Commissioner of Central Excise [2003 (152) ELT 361 (Tribunal)] held that Cenvat credit could be availed even when Additional Custom Duty is paid through DEPB. The order is well balanced and deals with all the relevant points. Off course it can be argued that para 4.3 of the EXIM policy was not pleaded in that case.
It may be kept in mind that Cenvat Credit under the Central Excise Act is availed as per the law laid down in the Cenvat Credit Rules, 2002.
Further it is seen that Cenvat Credit Rules are specific rules under which Cenvat Credit is to be availed. Thus even when there are some inconsistencies with EXIM policy, on the basis of principles of interpretation of statutes Cenvat Credit Rules shall prevail.
In view of this I am of opinion that Cenvat Credit should be allowed even when Additional duty has been paid through DEPB.
04 July 2011
Thanks for replying. Pl: suggest whether cenvat credit is admissible of CVD paid by adjustment in DEPB scrip. In Essar Steel Ltd VS CCE (2004) CESTAT -LB, importers availing benefit of notification 34/97-CUS, shall not entitle them to avail Cenvat credit simply by debit in DEPB.Only importers not taking exemption under said notification but paying duty separately, shall avail cenvat credit. Further, para 7.41 of Exim policy, state that Cenvat credit shall be taken to that extent to which duties paid by cash payment. The point which went against Essar Steel was that it took credit on strength of Bill of Entry, which did not show payment of CVD and hence, Cenvat credit cannot be taken on strength of such document. Honble' Larger bench opined, mere debit in pass book is not sufficient for eligibility of Cenvat Credit. This is keeping in view, leviability of interest on irregular availment of cenvat credit( decision of Honble' Apex Court in Ind: swift lab case) & interest u/s11AB. However, if any other case law subsequent to Essar Steel judgement, pl: provide for updatement. Thanks.
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