Whether the CENVAT credit of SAD can be allowed if duty payment is made through DEPB?

PJ/Case Laws/2012-13/1125

Case: COMMISSIONER OF CENTRAL EXCISE, HYDERABAD V/S OCEAN PHARMACOAT PVT. LTD.

Citation: 2012 (280) E.L.T 86 (TRI. BANGLORE)

Issue:- Whether the CENVAT credit of SAD can be allowed if duty payment is made through DEPB?

Brief Facts:- The respondent-assessee was allowed to take CENVAT credit of Special Additional Duty (SAD) paid on certain goods imported by them, under sub-section 5 of Section 3 of the Customs Tariff Act, by making use of DEPB credit by the Commissioner (Appeal). The Commissioner (Appeals) also set aside the penalty imposed on the party by the lower authority.

This application filed by the Department seeking stay of operation of the impugned order of the Commissioner (Appeals)

Appellant’s Contention:- Department relied on Board's Circular No. 18/2006-Custom; dated 5-6-2006 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. They also referred to Notification. No. 32/2005-Cus., dated 8-4-2005 which authorized importers to make debit entries in DEPB in lieu of payment of BCD and additional duties leviable under Section 3 of the Customs Tariff Act, subject to certain conditions. They also referred to Notification No. 19/2006-Cus., dated 1-3-2006 where SAD @ 4% ad valorem was introduced as a levy on all goods classifiable under whatever tariff entry. The main argument of the Department is that, when exemption Notification No. 32/2005-Cus. was issued, there was no levy of SAD (Special CVD) 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 said notification (No. 32/2005-Cus.).

Reasoning of Judgment:- The Tribunal perused the Notifications and Circulars referred by the Department and held that they could not find a valid point for the Department.

The Tribunal noted that the Respondent-assessee has claimed the benefit of CENVAT credit of SAD on the strength of para 6 of Circular No. 27/2006-Cus., dated 13-10-2006 wherein it was clarified that customs duty paid in cash or through debit in certificate issued under INCE/Target Plus Scheme could be availed as CEN VAT credit or duty drawback. This circular, however, did not refer to DEPB. Nevertheless, one of the conditions of Notification No. 32/2005- Custom clearly entitled importers to avail CENVAT credit of additional duty paid under Section 3 of the Customs Tariff Act. It is not in dispute 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 1-3-2006.

In the end it was held that Department has not made out prima facie case.

Decision:- Stay application rejected.

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PJ/Case Laws/2012-13/1125

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