Case Law Details
Nayara Energy Limited Vs Commissioner of Central Excise & ST, Rajkot (CESTAT Ahmedabad)
The issue involved in this case is regarding the eligibility to avail Cenvat credit of the amount of CVD paid as debit in Served From India Scheme (SFIS). It is undisputed that as per Rule 3 of the Cenvat Credit Rules, any duty paid under Section 3 of the Customs Tariff Act is eligible to an assessee as Cenvat credit. It is also undisputed that the appellant in this case has paid the CVD by a debit in the SFIS. We find that Appellant had imported capital goods under Notification No. 54/2003-Cus dated 01.04.2003 and Notification No. 94/2004-Cus dated 11.09.2004. These imports took place in 2005, 2006 and 2007. During the period 2004-05 to 2006-07. In the Foreign Trade Policy there is specific provision to allow Cenvat Credit in respect of scheme like VKGUY, Target Plus, Focus Products Scheme but no such provisions was made for SFIS and during the period from 2007-08 onwards, a general provisions at para 3.12.1 (2007-08 to 2008-09) and para 3.17.6 (2009-10 onwards) was made in this context which reads as under:
“CENVAT/ Drawback : 3.17.6 / 3.12.1: Additional Customs Duty / Excise Duty paid in cash or through debit under Duty Credit scrip shall be adjusted as Cenvat Credit or Duty Drawback as per DoR rules, except under SFIS”
However, the appellant claimed that as per the above para of FTP, the credit of duty paid by debit to SFIS scrip was not allowed implies that before the introduction of the said para, it was allowed because if it was not allowed before that also, then there was no need to insert the said para which only has prospective applicability. Whereas revenue contended that this interpretation of the appellant was wrong since the Government’s intention was never to extend facility of the Cenvat Credit related to export of service, right from the inception of this scheme in 2003, as per the said para, the continuity of denial of cenvat credit was maintained. However, we cannot hold that this change has got retrospective effect. We do not agree with the argument of revenue that the change in the policy should be with retrospective effect. If such an interpretation is taken, it would definitely upset all the earlier assessments, which we do not incline. The change in the Policy is only with prospective effect.
On a very careful consideration of the issue, we find that during the relevant disputed period, in the Foreign Trade Policy, there was neither an express provision to allow Cenvat credit of the CVD paid through debit in the SFIS scrip nor to disallow the Cenvat Credit of the CVD paid through SFIS. In such situation in our view admissibility of Cenvat Credit should be decided as per the provisions of Cenvat Credit Rules 2004, applicable during the relevant period. Cenvat Credit Scheme is a special scheme where an assessee can avail credit of the duty paid on the inputs /capital goods/ input services as CENVAT credit under certain conditions. Therefore in our opinion this issue requires re-adjudication. Accordingly, we set aside the impugned order. The case is remitted to the Adjudicating authority with the direction to decide the admissibility of cenvat credit on disputed imported Capital Goods afresh in accordance with provisions of Cenvat Credit Rules, 2004and pass a speaking order after giving the assessee a reasonable opportunity of being heard.
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