Cenvat credit of SAD on goods imported by using DEPB

PJ/Case Laws/2011-12/1567

Cenvat credit of SAD on goods imported by using DEPB - whether allowable?

Case: CCE V/S M/s OCEAN PHARMACOAT PVT. LTD.

Citation:2012-TIOL-203-CESTAT-BANG

Issue:- Whether importer allowed to take CENVAT credit of Special Additional Duty (SAD) paid on goods imported by making use of DPEB credit under Section 3(5) of the Customs Tariff Act?

Brief Facts:- Respondent has claimed the benefit of CENVAT credit SAD on goods imported through DEPB credit. The Adjudicating Authority denied the credit and also imposed penalty.

By order, the Commissioner (A) has allowed respondent to take CENVAT credit of SAD paid on certain goods imported by them under Section 3(5) of the Customs Tariff Act by making use of DEPB Credit. The penalty imposed on the party was also set aside.

This Application is filed by the Department seeks stay of operation of order of Commissioner (A).

Appellant’s Contention:- Department have considered the BOARD’S CIRCULAR NO.18/2006-CUS dt.5/6/2006 relied on by them in support of the contention that no CENVAT credit of special CVD (SAD) paid by the respondent through debit in DEPB account is admissible to them. The main argument was that when exemption Notification no. 32/2005-Cus was issued there was no levy of SAD under Section 3 of the Customs Tariff Act and nothing contained in the said Notification should be construed so as to enable importers to avail CENVAT credit of SAD in terms of condition 6 of the Notification. Certain other circulars and notifications have also been cited.

Respondent’s Contention:- Respondent has claimed the benefit of CENVAT credit SAD on the strength of para 6 of Circular no. 27/2006-Cus dt. 13/10/2006 wherein it was clarified that customs duty paid in cash or through debit in certificate issued under DFCE/Target Plus Scheme could be availed as CENVAT credit or duty drawback.

Reasoning of Judgment:- The Tribunal held that the Circular No. 27/2006-Cus did not refer to DEPB, nevertheless, one of the conditions of Notification No. 32/2005-Cus clearly entitled importers to avail Cenvat credit of additional duty paid under Section 3 of the Customs Tariff Act. It was noted that it is not disputed that the Notification was not amended to exclude Special CVD (SAD) from its purview when this new levy was introduced under Notification No. 19/2006-Cus dated 01.03.2006.

The Tribunal did not find merit in Department’s contention. No prima facie case made out.

Decision:- Application rejected.

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PJ/Case Laws/2011-12/1567

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