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M/s Mohan Breweries & Distilleries Ltd. Versus The Commissioner of Central Excise

2015 (9) TMI 1268 - MADRAS HIGH COURT

CENVAT Credit of CVD paid through DEPB - Whether in the absence of any restriction in the provisions of the Cenvat Credit Rules, 2002 and as in force during the period in dispute, the Tribunal was justified in holding that the appellant was dis-entitled to Cenvat Credit merely on the strength of the Exim policy as in force - Held that:- Under the Exemption Notifications, if the importers produced DEPB scrip and availed the exemption for clearance of goods, the goods become non-duty paid goods. T .....

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urt in Commissioner of Central Excise v. Spic Limited [2013 (9) TMI 93 - MADRAS HIGH COURT]. - Therefore, after a specific prohibition was introduced under the Scheme from 1.4.2000 onwards, it is not possible for the appellant to claim the benefit in respect of the Bill of Entry of the year 2003. Therefore, the decision in Spic, even if it is taken to water down the decision of the Larger Bench in ESSAR Steel Limited, does so only in respect of the period prior to 2000. Therefore, the decision o .....

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t Rules, 2002 and as in force during the period in dispute, the Tribunal was justified in holding that the appellant was dis-entitled to Cenvat Credit merely on the strength of the Exim policy as in force?" 2. Heard Mr.C.Saravanan, learned counsel for the appellant and Mr.E.Vijay Anand, learned Central Government Standing Counsel for the respondent. 3. The appellant is engaged in the manufacturer of glass bottles falling under Tariff sub-heading No.7007.90 of the First Schedule to the Centr .....

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use notice dated 7.10.2003, calling upon the appellant to show cause as to why the Cenvat Credit availed by them should not be recovered under Rule 12 of Cenvat Credit Rules, 2002 read with Section 11-A of the Central Excise Act, 1944. The appellant submitted a reply to the show cause notice. However, by an Order-in- Original passed on 31.3.2005, the Deputy Commissioner of Central Excise followed the decision of a Larger Bench of CESTAT in ESSAR Steel Ltd., v. Commissioner of Central Excise [173 .....

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aside the penalty. 7. The appellant filed a further appeal before the Tribunal. But the Tribunal dismissed the appeal by a final order dated 27.11.2008. Therefore, aggrieved by the said order, the appellant is before us. 8. The stand taken by the Original Authority was that unless Countervailing Duty (CVD) had been paid in cash, the assessee was not entitled to take credit based merely upon the debit entry in the passbook under DEPB Scheme. The Original Authority, as stated earlier, relied upon .....

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. 9. The Tribunal relied upon para 7.4.1 of the Exim Policy, as it was in force at the relevant time and held that Cenvat Credit would not be available for the additional duty of customs discharged using DEPB Scrip. According to the Tribunal, the importers of inputs were given an option under para 4.3.2 of the Exim Policy either to pay the additional customs duty in cash or to discharge liability using DEPB Scrip. Therefore, the Tribunal confirmed the decisions of the Original Authority and the .....

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to certain conditions. One of the conditions stipulated in the Notification is that the importer has been issued a Duty Entitlement Passbook DEPB by the licensing authority and the importer had been permitted credit entries in the DEPB. Subsequently, a Circular bearing No.5/2005-Cus. dated 31.1.2005 was issued. The Circular was actually on the question whether 2% Education Cess is to be leviable on the imports cleared under several Schemes including DEPB Scheme. It was stated in the said Circula .....

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ditional customs duty, in cash as well. Under para 4.3.5 of the Exim Policy, it was stated as follows:- "4.3.5 Normally, the exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty/excise duty paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue. In cases, where the additional customs duty is adjusted from DEPB, no benefit of CENVAT/Drawback shall be admissib .....

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iff or Letter of Undertaking as the case may be, are used in the intermediate product cleared for export the Cenvat Credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of Excise on any final product cleared for home consumption or for export on payment of duty. Where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to the conditions specified. 13. It is contended by the .....

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their favour. 14. But as pointed out by the learned Standing Counsel for the Revenue, DEPB Scheme was actually introduced in the Exim Policy, to neutralize the incidence of customs duty on import content of export products. The credit itself is available against exports products. What is refundable under Rule 5 of the Cenvat Credit Rules, 2002, is actually of "such amount" and hence the same can be relatable only to the payment. 15. Though the appellant claimed to have availed the bene .....

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ording to the respondents, when the Bill of Entry dated 25.1.2003, which is the relevant document specified in Rule 7 of the Cenvat Credit Rules, 2002, did not indicate payment of any duty, no Cenvat Credit can be availed. Therefore, we do not think that the Tribunal committed any mistake in law. 17. Under the Exemption Notifications, if the importers produced DEPB scrip and availed the exemption for clearance of goods, the goods become non-duty paid goods. The value of DEPB scrip, once used, ge .....

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