Commissioner Of CGST And Cx, Bolpur Commissionerate vs. M/S. Shyam Steel Industries Limited

Held

The Court held that the Tribunal rightly granted relief to the respondent assessee. The substantial questions of law were answered against the revenue. The Court found that there were no restrictions in the Customs Notifications dated 17.03.2012 and 01.03.2013 regarding the availment of CENVAT Credit on coal, unlike Serial No. 67 of Central Excise Notification No. 12 of 2012. The proviso to Rule 3(1)(i) restricting credit in case of coal cleared under Excise Notification No. 12/2012 could not be implicitly read into the CVD provisions. The Court agreed with the Tribunal that taxing statutes require strict interpretation and there is no room for intendment. The 'equivalent' nature of CVD under Rule 3(1)(vii) did not restrict it to the tariff rate of excise duty. The Court also noted the CBEC circular and the Regional Advisory Committee's minutes supporting the assessee's claim, as well as several Tribunal decisions in favour of the assessee on identical issues, which had not been reversed. Therefore, the appeal was dismissed.

Facts

The revenue (Commissioner of CGST and CX, Bolpur Commissionerate) filed an appeal against an order of the Customs Excise and Service Tax Appellate Tribunal (Tribunal) which allowed the appeal of the respondent assessee, M/s. Shyam Steel Industries Limited. The dispute concerns the eligibility of the assessee to avail CENVAT Credit in respect of 1%/2% concessional Additional Duty of Customs (CVD) paid on imported coal. The revenue alleged that the assessee contravened CENVAT Credit Rules, 2004, by mis-declaring goods as inputs and taking inadmissible input credit. An audit for the period 2013-2014 led to a show cause notice. The adjudicating authority disallowed CENVAT Credit, ordered recovery, interest, and penalty. The Commissioner (Appeals) partly allowed the assessee's appeal, affirming the reversal of credit, interest, and penalty. The Tribunal then allowed the assessee's appeal, leading to the present appeal by the revenue.

Key Issues

1. Whether the respondent assessee is eligible to avail CENVAT Credit in respect of 1%/2% (concessional rate) Additional Duty of Customs (CVD) paid on imported coal in terms of Notification No. 12/2012-Cus dated 17.03.2012 and 12/2013-Cus dated 01.03.2013, in view of the restriction for availing CENVAT Credit in terms of Notification No. 12/2012-CE dated 17.03.2012 (sl. no. 67 and condition no. 25)? 2. Whether the Learned Tribunal misdirected itself by allowing the appeal of the respondent without appreciating that if no credit of excise duty at the concessional rate of 1% is available under the proviso to Rule 3(1)(i) of the Cenvat Credit Rules, the credit of CVD at the rate of 1%/2% is also restricted? 3. Whether the restriction prescribed in respect of duty of excise in Notification No. 1/2011 CE dated 01.03.2011 and in Notification No. 12/2012 CE dated 17.03.2012 read with Rule 3 of the Cenvat Credit Rules, 2004 is applicable to the countervailing duty? Petitioner (Revenue) argued that Rule 3(1)(i) of the CENVAT Credit Rules, 2004, restricts CENVAT Credit for goods specified in Serial Nos. 67 and 128 if exemption under Notification 12-2012-CE is availed. They contended that CVD is 'equivalent' to excise duty and thus subject to the same conditions, and that interpreting otherwise would defeat the purpose of CVD. They relied on the dictionary meaning of 'equivalent' and the general purpose of levy. Respondent (Assessee) argued, referencing the Tribunal's findings and case law, that the notifications for CVD did not contain the same restrictions as the excise notifications. They highlighted that the word 'equivalent' in Rule 3(1)(vii) allows for flexibility. They also referred to a CBEC Circular No. 41/2013-Cus and minutes of a Regional Advisory Committee meeting which supported their claim for credit.