By TIOL News Service

MUMBAI, JUNE 28, 2016: THE issue is - For the purpose of taking CENVAT Credit on the invoice issued by 100% EOU, whether for applying the formula in terms of Rule 3(7)(a) of CCR, 2004, the denomination of BCD, whether it should be taken as tariff rate applicable on the goods or actual rate that was applied by the 100% EOU in the invoices.

In the present case whether BCD denomination is to be taken @7.5% as claimed by the appellant or @ 1.875% as per the claim of the Revenue.

The formula given in the referred rule is -

Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value.

The appellant is before the CESTAT and submits that in the present case applicable rate is 7.5% though the supplier 100% EOU charged BCD @ 1.875% by availing exemption notification No. 23/2003-CX dated 31/3/2003 but as per the provision of the rule, the rate of duty which is leviable in case of import of goods shall apply and not actual rate which is applied & paid by the 100% EOU supplier. Reliance is placed on the decision in M/s. Micro Labs Ltd - 2015-TIOL-2825-CESTAT-BANG in support.

The AR while reiterating the findings of the lower authorities justified the stand taken by relying on Bisleri International (P) Ltd. - 2009-TIOL-327-CESTAT-MAD.

The Bench observed -

"5. …, I find that from the impugned order, the question arises that for the purpose of formula whether applicable rate of 7.5% or actual rate applied by the supplier @1.875% has to be taken for denomination of BCD. On going through Rule 3(7)(a), I find that it clearly states “where BCD CVD denotes advalorem rates, in percent of Basic Customs Duty and Additional Duty of Customs leviable on the inputs or capital goods respectively.” From the above language it is rate of basic custom duty which is leviable has to be taken and not rate at which duty was paid by the 100% EOU supplier. Therefore contention of the Ld. Commissioner in the impugned order is not correct and legal. The contention of the appellant is supported by this Tribunal decision in case of M/s. Micro Labs Ltd. (supra) …"

Holding that the decision cited by the appellant is squarely applicable in the facts of the present case, following the same, the impugned order was set aside &the appeal was allowed.

(See 2016-TIOL-1548-CESTAT-MUM)