Custom, Excise & Service Tax Tribunal
Chettinad Cement Corporation P Ltd vs Commissioner Of Gst&Cce(Trichy) on 31 May, 2024
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Excise Appeal No.40639 of 2019
(Arising out of Order-in-Original No. 04/COMMR/CE/2019 dated 31.01.2019
passed by Commissioner of GST & Central Excise, Trichy)
M/s. Chettinad Cements Corporation Pvt. Ltd., .... Appellant
Kumararajah Muthiah Nagar,
Puliyur, Karur District 639 114.
VERSUS
The Commissioner of CGST & Central Excise ...Respondent
No.1, Williams Road, Cantonment, Trichy - 620 001.
With Excise Appeal No.42656 of 2018 (Arising out of Order-in-Original No. 19/COMMR/CE/2018 dated 14.09.2018 passed by Commissioner of GST & Central Excise, Trichy) M/s. The Ramco Cements Ltd., .... Appellant Alathiyur Works, PAC Ramaswamy Raja Nagar, Cement Nagar Post, Ariyalur Dist - 621 730 VERSUS The Commissioner of CGST & Central Excise ...Respondent No.1, Williams Road, Cantonment, Trichy - 620 001.
And Excise Appeal No.42657 of 2018 (Arising out of Order-in-Original No. 20/COMMR/CE/2018 dated 14.09.2018 passed by Commissioner of GST & Central Excise, Trichy) M/s. The Ramco Cements Ltd., .... Appellant Govindapuram Works, Sendurai Road, Ariyalur Dist - 621 713 VERSUS The Commissioner of CGST & Central Excise ...Respondent No.1, Williams Road, Cantonment, Trichy - 620 001.
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E/40639/2019;E/42656/2018&E/42657/2018 APPEARANCE :
Shri. R. Parthasarathy, Consultant, for the Appellant Shri. M. Selvakumar, Authorised Representative for the Respondent CORAM :
HON'BLE MS. SULEKHA BEEVI.C.S., MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER No.40586-40588/2024 DATE OF HEARING : 27.05.2024 DATE OF DECISION : 31.05.2024 Per Ms. Sulekha Beevi. C.S The issue involved in all these appeals being the same they were heard together and are disposed of by this common order.
2. The appellant is engaged in manufacture of Clinker and Cement and are registered with the Central Excise department. The appellant imported Steam Coal and used the same in generation of steam/electricity which in turn was used in relation to the manufacture of their final product. Steam coal falls under Tariff Item 27011920 of the First Schedule of Central Excise Tariff Act 1985. From 01.03.2011, Steam Coal was attracting Central Excise duty at the rate of 5% adv. (Tariff Rate) vide Notification No.02/2011-CE dated 01.03.2011. However, concessional rate of 1% adv. also was available under Notification No.01/2011-CE dated 01.03.2011 (Sl. No. 28) subject to the condition that CENVAT Credit of Central Excise duty paid on inputs or Service Tax paid on input services should not have been taken under provisions of the erstwhile CENVAT Credit Rules 2004. Further, vide Notification No.03/2011-CE (NT) dated 01.03.2011, a proviso was inserted after clause (i) of sub rule (1) of Rule 3 of the CENVAT Credit 3 E/40639/2019;E/42656/2018&E/42657/2018 Rules 2004, providing that Cenvat Credit of the duty of the excise paid on any goods availing the benefit of an exemption under Notification No. 01/2011 CE dated 01.03.2011 should not be allowed to be taken.
3. The CBEC vide letter No. B-1/3/2011 - TRU dated 25.03.2011 clarified as below:-
"Doubts have been raised about the applicable CVD rate on the 130 items, on which Excise Duty @ 1% has been levied vide notification 1/2011-CE dated 01.03.2011, when imported. It is further learnt that manual bills of entry have been permitted at certain customs locations as 1% CVD rate was not available in the system. This concessional rate of 1%, however, is available only if the Cenvat credit on inputs and input services is not availed of; otherwise all these items attract 5% Excise duty as prescribed vide notification 2/2011-CE dated 01.03.2011 and Tenth Schedule to the Finance Bill. At the time of updating of ICES, the Directorate of Systems had been advised not to feed notification 1/2011-CE dated 01.03.2011 in the system as 1% rate will not be applicable for CVD purposes. There should have been no confusion on the subject. Since the CVD is levied to provide a level playing field for the domestic manufacturers, CVD is charged at a rate equal to excise duty rate. However, in respect of these 130 items, there are two excise duty rates. It needs to be appreciated that if CVD is levied @ 1%, the protection for the domestic manufacturer would be lost since in the country of origin, the overseas supplier enjoys input tax neutralization on goods exported to India (akin to availment of input tax credit), whereas on the other hand the domestic manufacturer suffers all the input taxes and 1% excise duty over and above that. Since 5% excise duty rate is payable when the Cenvat credit of duties and taxes paid on inputs and input services is availed of, the tax treatment becomes equitable with the goods being imported into India, the input taxes having been neutralized in the country of export. As such, the CVD of 5% will be applicable in respect of all the goods covered under notification 1/2011-CE dated 01.03.2011 and 1% rate will not apply."
4. On 17.03.2012 the Tariff rate of Steam Coal was increased from 5% to 6%. Notification No.01/2011-CE dated 01.03.2011 was amended by Notification No.16/2012- CE dated 17.03.2012 increasing the concessional rate of duty of excise from 1% to 2% adv. and deleting the entry relating to Heading 2701 (Sl. No 28). Notification 4 E/40639/2019;E/42656/2018&E/42657/2018 No.12/2012-CE dated 17.03.2012 was issued providing for concessional excise duty of 1% for all goods falling under Heading 2701 (Sl. No. 67), subject to the condition (Condition No. 25) that no credit under Rule 3 of Rule 13 of CENVAT Credit Rules 2004 had been taken in respect of the inputs or input services used in the manufacture of these goods. Customs Notification No.12/2012 -Cus dated 17.03.2012 was issued covering Steam Coal under Sl.No.123 with 'NIL' rate of Basic Customs Duty and CVD at 1% adv.
5. Subsequently, vide Notification No.21/2012-CE (NT) dated 27.03.2012 Rule 3 (1) of the Cenvat Credit Rules, 2004 was further amended inserting another proviso debarring availment of Cenvat Credit of duty paid on the goods specified in Sl.No.67 or 128 of Notification No.12/2012-CE dated 17.03.2012 availing the exemption there.
6. Therefore, from 27.03.2012 while clause (i) allowed CENVAT Credit of duty of excise specified in the First Schedule to Central Excise Tariff Act 1985 leviable under the Central Excise Act, the proviso to the said clause debarred taking of Cenvat credit of the duty of excise paid at 2% adv. availing an exemption under Notification No.01/2011- CE or paid at the rate of 1% adv. on the goods specified in Sl. No.67 or 128 of Notification No.12/2012-CE, dated 17.03.2012 availing the benefit of exemption under said notification.
7. From the above, the department was of the view that CENVAT Credit of duties of excise paid on the input, Steam Coal can be allowed to be taken only if it is paid at the Tariff Rate of 6% adv. and not if it 5 E/40639/2019;E/42656/2018&E/42657/2018 is paid at the concessional rate of 1% adv. availing exemption under Notification No.12/2012 - CE or earlier Notifications. Therefore, in the case of Steam Coal used as an input by the appellant it appeared that CENVAT Credit of CVD was allowable only if the CVD paid is equivalent to the duty of excise payable under clause (i) of Customs Notification No 12/2012 - Cus dated 17.03.2012. By a domestic manufacturer of Steam Coal availing Cenvat benefit (6% adv.) and is not eligible, if CVD has been paid availing any exemption.
8. The details obtained from the appellant revealed that they had taken CENVAT Credit of the Additional Duty of Customs (CVD) paid on the imported Steam Coal at the rate of 1%/2% adv. availing exemption under Customs Notification No.12/2012-Cus dated 17.03.2012 as amended by Notification No.12/2013-Cus dated 01.03.2013. The department was of the view that the appellant is not eligible to avail the CENVAT Credit of the CVD paid on the imported Steam Coal at the concessional rate of 1%/2% adv. So, separate show cause notices were issued to the appellants for the different periods proposing to deny the CENVAT credit and to recover the same along with interest. After due process of law, the original authority, confirmed the demands along with interest and imposed penalties. Aggrieved by such order, appellant is now before the Tribunal.
9. The Ld. Consultant Shri. R. Parthasarathy, appeared and argued for the appellants. It is explained by the consultant that Rule 3 of CCR 2004 does not restrict availment of Cenvat credit of CVD at the rate of 1%/2% paid on Steam Coal imported and subjected to CVD assessment under notification 12/2012-Cus dated 17.03.2012 as 6 E/40639/2019;E/42656/2018&E/42657/2018 amended. In fact, Rule 3 of CCR 2004 restricts only the Cenvat credit of duties of excise paid in terms of Notification No.12/2012-CE dated 17.03.2012.
10. The issue stands covered by the decision in the appellant's own case, M/s. Chettinad Cements Corporation Pvt Limited versus Commissioner of GST and Central Excise, Trichy vide Final order No. 40972/2023 dated 26.10.2023. The Ld. Consultant prayed that the appeals may be allowed.
11. The Ld. AR Shri. M. Selvakumar appeared and argued for the department. The discussions in para 22.06 to 24 in appeal No. E- 40639/2019 was adverted to and reiterated by the authorised representative.
12. Heard both sides.
13. The issue to be analysed is whether appellant is eligible to take Cenvat credit of 1%/2% CVD paid on imported Steam Coal vide Notification No.12/2012- Cus dated 17.03.2012. The issue has been decided by the Tribunal in the case of M/s. Chettinad Cements Corporation Pvt Limited (supra) by final order dated 26.10.2020. The Tribunal had followed the decision in the case of M/s. Tamil Nadu Newsprint and Papers Limited versus CGST and CE Trichy 2021 (10) TMI 13 - CESTAT Chennai. The demand raised and confirmed denying the Cenvat credit availed on CVD paid on imported Steam Coal was set aside. The relevant para of the said decision reads as under:-
9. The issue is whether the appellant is eligible to take the CENVAT Credit of 2% CVD paid on imported steam coal vide notification 12/2012 Cus. dated 17/3/2012. The issue has been 7 E/40639/2019;E/42656/2018&E/42657/2018 considered by the Tribunal in the case of M/s. Tamilnadu News Print and Papers Ltd. Vs. CGST and CE, Trichy 2021 (10 TMI 13 - CESTAT, Chennai). The relevant part of the decision reads as under:
10. From the submissions made by the Ld. Counsel as well as after perusal of the decisions, placed before us, we are of the considered opinion that the issue stands covered by the above decision. The bar to take cenvat credit is only when the benefit of exemption specified at Sl.No.67 and 128 under Notification No.12/2012-CE dt. 17.3.2012 is availed. The CCR 2004 does not impose any bar or restriction in availing credit when the benefit of exemption is availed under the Notification No.12/2012-Cus. dt. 17.3.2012. The issue stands decided in the decision of Hindustan Zinc Ltd. (supra). The relevant paragraphs of said decision are reproduced as under :
"6. After hearing both the parties and perusing the record, we are of the opinion as follows :
It is admitted that the appellants have imported coal consequent thereto they have paid 1%/2% on CVD in addition to Basic customs duty. The CVD has been paid at the said exempted rate taking the benefit of Sl. No. 123 of Customs Notification No. 12/2012-Cus., dated 17-3-2012.
It is apparent from the order in challenge that Department has denied the payment of CVD on exempted rate and the availment of Cenvat credit thereupon relying upon the S. No. 67 of Excise Notification No. 12/2012, dated 17-3-2012.
7. Perusal of both these notifications reveal that the Customs notification is applicable to the imported coal whereas the Excise Notification is applicable to the domestically manufactured goods. The Condition No. 25 of Excise notification which denies availment of Cenvat credit on imports of coal manufactured by the supplier of coal, as has been taken the basis in the order-in-original, shall therefore be applicable for domestically manufactured goods only and not on the imported coal. Perusal of Excise Notification No. 67 further reveals that no such condition is applicable in case of import of coal.
8. The narrow compass of the adjudication, therefore, remains as to 'whether under Customs notification against S. No. 67 i.e., while importing the coal, the appellants were entitled to avail the Cenvat credit on the amount of CVD paid. The Cenvat credit is applicable as per Rule 3(1) of the Cenvat Credit Rules, 2004, clause 7 thereof entitles the appellants to avail the Cenvat credit in the given circumstances.
The said Rule itself clarifies that the Cenvat credit of duty of excise is not allowed to be taken when paid on any goods specified under S. Nos. 67 and 128 of Excise Notification No. 8 E/40639/2019;E/42656/2018&E/42657/2018 12/2012, dated 17-3-2012. Admittedly, the notification relied upon by the department for denying the impugned benefit to the appellant is Customs Notification No. 12/2012, dated 17- 3-2012. The restriction of Rule 3 is not applicable to the said notification. Above all, the Hon'ble Supreme Court in the case of SRF Ltd. v. CC Chennai [2015 (318) E.L.T. 607 (S.C.)] has held that Excise Notification No. 12/2012 is applicable only in respect of any digged or manufactured coal and not in respect of imported coal. The import whereof is allowed to have exempted rate of CVD vide Customs Notification No. 12/2012-Cus.
9. In view of the entire above discussion, we are of the firm opinion that the adjudicating authority has committed a legal error while denying the benefit of reduced CVD on imported coal while placing reliance upon the Excise notification for manufacture of coal. Order is therefore, held not sustainable and accordingly, is hereby set aside. Resultantly, the appeal stands allowed.‛
14. Following the above decisions, we are of the considered opinion that the demand cannot sustain and requires to be set aside. The impugned orders are set aside. The appeals are allowed with consequential reliefs if any.
(Order pronounced in the open court 31.05.2024) (VASA SESHAGIRI RAO) (SULEKHA BEEVI. C.S) Member (Technical) Member (Judicial) psd