Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Dcw Ltd. on 3 June, 2005
Equivalent citations: 2005(102)ECC548
ORDER P.G. Chacko, Member (J)
1. This appeal of the Revenue is against on order of the Commissioner (Appeals) allowing Modvat credit of CVD of Rs. 2,98,157 to the respondents. The respondents had imported certain capital goods for their 'caustic soda fusion plant'. The imported goods was cleared under Bill of Entry at 19.5.98 which was assessed to a total CVD of Rs. 6,21,070. Out of this amount, the importer paid Rs. 2,98,157. by way of debit in their DEPB (Duty Exemption Entitlement Pass Book) and the balance amount of Rs. 3,22,913 by cash. They took Modvat credit of the entire CVD amount, which was objected to by the department. The original authority disallowed the credit to the extent of Rs. 2,98,157 (paid through debit in DEPB) on the ground that payment of CVD by way of debit in DEPB could not be equated to payment in cash. In other words, the authority allowed credit of only that part of the CVD which was paid in cash. It also imposed a penalty of Rs. 1000 on the importer. The assessee's appeal against the order of the original authority was allowed by the Commissioner (Appeals) who held that, in view of the Tribunal's decision in Polyhose India Pvt. Ltd. v. CCE, Chennai, , the assessee was entitled to the benefit of Modvat credit in respect of the entire CVD (Rs. 6,21,070). Hence the present appeal of the Revenue.
2. In the Memorandum of Appeal, the Revenue has stated that the Tribunal's decision in Polyhose India (supra) is the subject-matter of a reference application filed by the department in the Madras High Court. With reference to this ground of appeal, Ld. DR points out that a Larger Bench of the Tribunal has, in the case of Essar Steel Ltd. v. Commissioner, , disapproved the view which was taken in Polyhose India (supra) without examining the purport of Notification No. 34/97-Cus. It is, further, submitted that the Larger Bench has settled in favour of the Revenue the question arising in the instant case. Ld. counsel for the respondents has made an attempt to distinguish the case of Essar Steel Ltd. (supra) by submitting that the EXIM Policy provision relevant to the instant case is different from the one considered by the Larger Bench. Ld. counsel has also argued that debit in DEPB is also a mode of payment of customs duty and, therefore, Modvat credit of CVD so paid should be allowed.
3. After considering the submissions carefully, I am unable to accept the arguments put forward by Ld, counsel inasmuch as such arguments have been taken care of in the Larger Bench decision. In Essar Steels (supra), the Larger Bench examined Para 7.41 of the relevant EXIM Policy as well as the provisions of Notification No. 34/97-Cus. and held beyond any shadow of doubt that when an importer paid duty of customs in part by way of debit in DEPB, he was availing the benefit of the above Notification to such extent. Simultaneous availment of Modvat credit and the benefit of exemption Notification was ruled out by the Larger Bench. The present case is squarely covered by the Larger Bench decision, which is in favour of the Revenue. However, as regards the penalty of Rs. 1000 imposed on the assessee by the original authority, I am of the view that such a penalty is not warranted in a case of this nature involving interpretation of an Exemption Notification and EXIM Policy provisions.
4. In the result, the impugned order is set aside and the order of the original authority is restored except in relation to the penalty. The Revenue's appeal is allowed to this extent.