CENVAT - Para 4.3.5 of EXIM Policy 2002 specifically provides that in case additional Customs duty is adjusted from DEPB no benefit of CENVAT or duty drawback is eligible - Appeals dismissed: CESTAT
By TIOL News Service
MUMBAI, JUNE 10, 2013: A demand of Rs. Rs. 1,23,68,399/- along with interest and penalty is confirmed against the appellant after denying CENVAT Credit on inputs imported under the DEPB Scheme for which the Additional Duty of Customs (CVD) was adjusted through DEPB and not paid by cash. The Managing Director of the firm has also been saddled with a penalty of Rs.10 lakhs u/r 26 of the CER, 2002 r/w rule 16 of CCR, 2004.
Against this order, the appellant is before the CESTAT.
It is submitted that the adjustment through DEPB is also payment of duty and hence the CENVAT credit cannot be denied. Reliance is placed on the decision in Tanfac Industries Ltd. vs Assistant Commissioner of Central Excise 2009-TIOL-291-HC-MAD-CUS. It is also submitted that the demand is time barred as the credit availment is reflected in the monthly returns.
The Revenue representative relied on the decision in Essar Steel Ltd. vs. CCE 2004-TIOL-807-CESTAT-DEL-LB to justify the departmental stand. On the question of limitation, it is submitted that the appellant never disclosed that credit has been taken in respect of CVD which is adjusted against DEPB. The statement of Mr. Dyanesyhwar Yeole is also adverted to wherein it is admitted that the appellants were aware that such credit of Additional Duty of Customs adjusted through DEPB is not admissible as per para 4.3 of the EXIM Policy 2002-07.
The Bench observed -
“11. In this case the issue is whether mere debit is sufficient for eligible of credit on the strength of Bill of Entry where the appellant availed the benefit of Notification No. 45/02-Cus dated 22.4.2002 which exempts the duty of Customs both basic and additional when the duty leviable is debited in the DEPB pass book.
12. The appellant relied upon the decision of the Hon'ble Madras High Court judgment in the case of Tanfac Industries Ltd supra. The issue before the Hon'ble Madras High Court was whether the assessee is liable to pay interest under Section 61 (2) of the Customs Act when no duty is paid in cash as per Customs Notification adjusted has been debited to the DEPB. While deciding this issue, the Hon'ble High Court held that the adjustment in DEPB is also payment of duty and the assessee is liable to pay interest.
13. The issue in the present case is whether the appellant is eligible to take credit in respect of the CVD paid by debiting in the DEPB as per the provisions of Exemption Notification NO. 45/2002-Cus. This issue is specifically dealt with by the Larger Bench of the Tribunal in the case of Essar Steel Ltd. supra. The Tribunal held that mere debit in DEPB pass book is not sufficient for eligibility of Modvat credit availed on the strength of Bills of Entry wherein importers availed benefit of Notification NO. 34/97-Cus which exempts duties of customs when duty leviable on goods debited to DEPB.
14. Further we find that as per para 4.3.5 of Exim Policy 2002-07 specifically provides that in case where the Additional Customs duty is adjusted from DEPB no benefit of CENVAT Credit or duty drawback is eligible. In view of the clear provisions of the Exim Policy and in view of the admitted fact we find no infirmity in the impugned order whereby the demand is confirmed after denying the credit alongwith interest and penalty.
15. In respect of the time bar, we find that as the appellants were availing the benefit of Customs Notification as per Exim Policy 2002-07 and goods were cleared without payment of duty by adjusting the duty amount from DEPB and as per the Exim Policy credit is not admissible in respect of such adjustment. Further we find that there authorized signatory in his statement stated that the appellants were aware of the fact that as per the Exim Policy no credit is admissible. Further, the appellant has not disclosed the fact that duty has been paid by making debit in the DEPB while denying credit in the monthly return. We find no infirmity in the order whereby demand is confirmed by invoking the extended period of limitation.
16. In respect of penalty on the Managing Director, the contention of the appellant is that the appellant acted as per the advice of their consultant and as per the advice of their consultant and as per the legal position prevailed at the time of taking credit. Therefore, the managing Director is not liable for penalty.
17. The revenue submitted that the appellant Shri Prakash Parakh, Managing Director, in his statement dated 13.10.2005 admitted that he was aware of the fact that the credit has been wrongly availed and as per the Exim Policy where additional duty of Customs is paid, no benefit of CENVAT Credit drawback is admissible.
18. We find that as the appellant availed benefit of Notification No. 45/2002-Cus and was aware of the Exim Policy appellants were not eligible for credit of duty adjusted from DEPB and this fact was admitted by the Managing Director. Therefore, we find no ground to interfere with the impugned order imposing penalty on the Managing Director. The appeals are dismissed.”
(See 2013-TIOL-864-CESTAT-MUM)
