Custom, Excise & Service Tax Tribunal
M/S Jindal Saw Ltd vs Commissioner (Appeals-Iii) Of Central ... on 14 March, 2018
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ~~~~~ Appeal No : E/10707/2016 (Arising out of OIA-KCH-EXCUS-000-APP-041-15-16 dated 29.01.2016 passed by Commissioner (Appeals-III), Central Excise-Rajkot) M/s Jindal Saw Ltd. : Appellant (s) Vs Commissioner (Appeals-III) of Central Excise -Rajkot : Respondent (s)
Represented by:
For Appellant (s) : Shri R. Santhanam, Advocate For Respondent (s): Shri S. N. Gohil, AR CORAM :
Dr. D. M. Misra, Hon'ble Member (Judicial) Date of Hearing: 20.11.2017 Date of Decision:14.03.2018 ORDER No. A/10508 / 2018 Per : Dr. D. M. Misra Heard both sides.
2. This is an appeal filed against the order-in-appeal No. KCH-EXCUS-000-APP-041-15-16 dated 29.01.2016 passed by Commissioner (Appeals-III), Central Excise-Rajkot.
3. Briefly stated the facts of the case are that the appellant are engaged in the manufacture of Coated Steel Pipes availed Cenvat credit amounting to Rs. 25,81,480/- during the period October 2009 to July 2012 on the amount of 2% Education Cess and 1% Secondary and Higher Secondary Education Cess paid on CVD potion of the duty by the 100% EOU, the inputs supplier, in accordance with Sr. No. 2 of the Notification No. 23/2003-CE dated 31.03.2003. Alleging that the Education Cess and Secondary and Higher Secondary Cess paid on CVD portion of the duty paid by the 100% EOU is not admissible to credit, SCN was issued for recovery of the said credit with interest and proposal for penalty. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the said order, the appellant filed appeal before the Ld. Commissioner (Appeals), who inturn, rejected their appeal. Hence, the present appeal.
4. Ld. Advocate Shri R. Santhanam for the appellant submits that the issue is no more res-integra and covered by the judgement of this Tribunal in the case of Jai Corp Ltd. Vs. CCE & ST Vapi 2015 (317) ELT 489 (Tri.-Ahmd.), Zabatex Textiles India Pvt. Ltd. Vs. Commissioner of Central Excise & Service tax Vapi 2016 (366) ELT 75 (Tri.-Ahmd.). Further, he has submitted that the Honble Supreme Court in the case of M/s SRD Nutrients Pvt Ltd. Vs. CCE Guwahati 2017-TIOL-416-SC-CX observed that once refund of excise duty under the area based exemption notification is admissible, the Education Cess and Secondary and Higher Secondary Education Cess paid by the manufacturers on the excise duty also liable to be refunded. It is his contention that therefore the Education Cess and Secondary and Higher Secondary Education Cess paid on CVD portion of the duty by the 100% EOU, inputs supplier is eligible to credit under Rule 3(7) of the CCR,2004.
4. Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner (Appeals).
5. I find that the issue of admissibility of Cenvat credit of 2% Education Cess and 1% Secondary and Higher Secondary Education Cess paid on CVD portion of the duty by 100% EOU held to be admissible to credit by this Tribunal in Jai Corp Ltds case (supra) observed as follows:-
5.?In view of the above settled position of law Cenvat credit of Cesses was admissible before the amendment also. So far as calculation of admissible Cenvat credit, as per formula prescribed under Rule 3(7)(a) of the Cenvat Credit Rules, 2004 is concerned, appellant argued that elements of Education Cess and SHE Cess has to be considered as a part of CVD only. Appellant has relied upon the case laws of Shri Venketeshwara Precision Components v. CCE, Chennai (supra) and CCE, Chennai v. Jumbo Bags Limited (supra). In view of these case laws relied upon by the appellant this issue is no more res integra as per Para 6 of the case law CCE, Chennai v. Jumbo Bags Limited (supra) :-
6.?As regards the cases where the duty has been paid by the suppliers availing exemption under Sr. No. 2 of the Table under Notification No. 23/2003-C.E., dated 31-3-2003, the restriction under the proviso to Rule 3(7) of the Cenvat Credit Rules, 2004 comes into play as the period involved in this case is between June, 2007 to December, 2008. As has been argued by the learned advocate, there is no dispute that the restriction placed under sub-rule 7(3) is intended to prohibit a manufacturer from taking credit of that portion of the duty which is equivalent to the Basic Customs Duty. This provision is required so as not to give any undue advantage in respect of any supplies from the EOUs since in the case of imported goods, there is no provision for taking credit of the Basic Customs Duty paid on the imported inputs. As regards the Additional Duty of Customs, which is levied under Section 3 of the Customs Tariff Act, 1975, the same is equal to duty of excise including cess, which is also levied and collected as duty of excise, and hence credit is available under the main provisions under Rule 3(1) of the Cenvat Credit Rules, 2004 in respect of imported goods as well as in respect of indigenously produced goods. In the case of goods produced by EOUs, which are Units within the territory of India, the intention is to charge excise duty equivalent to the Customs Duty leviable on such goods, if imported. The calculation of such excise duty includes Basic Customs Duty as well as Additional Customs Duty. In turn, the Additional Customs Duty includes the excise duty as well as cess on excise duty. The formula provided under Rule 3(7) of the Cenvat Credit Rules, uses an expression CVD but the same is defined to be the Additional Duty of Customs. Hence, the expression would include not only the amount equivalent to the excise duty but also the amount equivalent to the cess on such excise duty. Since the restriction under the said sub-rule (7) is worded in such a ways to restrict credit of Basic Customs Duty but allow credit of Additional Customs duty, the appellants are within their rights to take credit of an amount equivalent to the Additional Customs Duty inclusive of excise duty as well as the amount of cess on such excise duty. I also note that there is no restriction on taking credit of cess in the Cenvat Credit Rules, 2004 although there is a restriction regarding utilization of various credits. On the other hand, Rule 3(1) does allow taking of credit of cess specifically. I also find that in the case Emcure Pharmaceutical cited supra, credit of cess has been allowed though entirely for different reasons. In view of the above while calculating admissible CENVAT credit under Rule 3(7)(a) of Cenvat Credit Rules, 2004, appellant has correctly factored Education Cess and Higher Education Cess as CVD paid.
6. Following the aforesaid precedent and the subsequent judgement of this Tribunal in Zabatex Textiles India Pvt. Ltds (supra), I do not find merit in the impugned order passed by the Ld. Commissioner (Appeals). Consequently, the same is set-aside and the appeal is allowed with consequential relief, if any, as per law.
(Order pronounced on14.03.2018) (D. M. Misra) Member (Judicial) G.Y. 4 Appeal No. E/10707/2016