By TIOL News Service

MUMBAI, NOV 21, 2016: THE appellant imported various materials for production as well as for carrying out trading of the same goods. At the time of clearance of the said imported goods, appellant gave a declaration to the Customs Department that the said goods are for re-sale, therefore, SAD is exempted vide notification No. 22/99-Cus dated 28-2-1999. However, appellant paid CVD for the clearance of such imported goods and took MODVAT Credit in respect of CVD paid. Part of the material was used in the manufacture of final product and part of the material was resold. As regard goods resold, appellant have paid duty equal to MODVAT credit availed in respect of CVD u/r 57F(3) of CER, 1944.

Department issued SCN seeking denial of MODVAT credit on the ground that appellant had filed declaration that the imported goods are meant for re-sale, therefore, they were not entitled to take credit.

The lower authorities confirmed the demand and, therefore, the appeals.

The appellant submitted that the declaration given by them is in respect of Notification 22/99-Cus and this does not prevent them from taking MODVAT credit.

The AR submitted that the appellant had taken double benefit inasmuch as they claimed exemption under Notification No. 22/99-Cus from payment of SAD and at the same time have availed modvat credit in respect of CVD.

The Bench observed -

+ I find that the declaration was filed in order to avail the exemption from SAD whereas appellant availed MODVAT credit in respect of CVD which was admittedly paid.

+ The MODVAT credit rules prevailing at the material time does not bar from taking credit of CVD if the importer availed exemption notification No. 22/99-Cus or filed any declaration to that effect.

+ The fact is not under dispute that goods imported by paying CVD has either been used in the manufacture of final product which was cleared on payment of duty and/or cleared as such on payment of duty in terms of Rule 57F(3) of Central Excise Rules, 1944.

Holding that there was no reason to deny the MODVAT credit of the CVD paid, the impugned order was set aside and the appeals were allowed.

(See 2016-TIOL-3016-CESTAT-MUM)