India Cements Ltd. Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The appeal before the CESTAT Chennai arose from an order passed by the Commissioner of Central Excise & Service Tax, Trichy, confirming demand of CENVAT credit amounting to ₹3.63 crore along with interest and penalty of ₹2.42 crore under the CENVAT Credit Rules, 2004 and related provisions. The dispute pertained to availment of CENVAT credit on Countervailing Duty (CVD) paid on imported steam coal at concessional rates of 1%/2% under Notification No. 12/2012-Cus, as amended.
The Department denied credit on the ground that concessional CVD was not “equivalent to duty of excise” and therefore not eligible for credit under Rule 3(1)(vii). The appellant contended that eligibility depends on the nature of levy under Section 3(1) of the Customs Tariff Act, 1975, and not on the rate of duty. It was argued that Rule 3 permits credit of additional duty leviable under Section 3 without any requirement that it be paid at tariff rate.
The Tribunal examined the statutory framework and held that CVD is an additional duty of customs levied under Section 3(1), measured with reference to excise duty but retaining its character as customs duty. The expression “equivalent to duty of excise” refers to the measure of levy and not to equality in rate. Therefore, concessional rate of duty does not alter the nature of the levy or eligibility for credit.
