LONSENKIRI CHEMICALS INDUSTRIES Vs. C.C.E.

JUDGEMENT

(1.) This Tax Appeal is filed by the assessee challenging the judgment of Customs, Excise and Service Tax Appellate Tribunal ('CESTAT' for short) dated 9-10-2017. Following questions are presented for our consideration :

(2.) The appellant imports coal on which ordinarily countervailing duty in the nature of excise duty would be payable. However, by virtue of Notification No. 1 of 2011, dated 13-2011 and Sr. Nos. 67 and 128 of exemption Notification No. 12 of 2012, dated 17-32012, the assessee would either pay duty at the reduced rate or Nil rate of duty. In this context, the question of allowing the assessee to claim Cenvat credit arose. The Revenue authorities and the Tribunal held that by virtue of proviso to Rule 3(1) of Cenvat Credit Rules, 2004, ('the Rules' for short) in view of the benefit availed by the assessee and the said exemption notifications, Cenvat credit would not be allowable. It is this view which the assessee has challenged before us. Relevant portion of Rule 3(1) of the Cenvat Credit Rules reads as under :

(3.) It is not in dispute that the assessee has availed of the benefit of exemption Notification No. 1 of 2011 and also the benefits under Sr. No. 67 and 128 of exemption Notification No. 12 of 2012. In that view of the matter, the above noted proviso of the Rules, would disentitle the assessee from claiming Cenvat credit. Counsel for the assessee however submitted that this proviso refers to Cenvat credit of "such duty of excise". In the present case, what the assessee has paid was the countervailing duty. The same may have been computed in terms of Excise duty payable on local manufacturers, nevertheless, the same cannot be treated as duty of excise per se. He however candidly agreed that the facility for getting Cenvat credit in the case of the present assessee flows from Rule 3 of the Rules. As per sub-rule (1) of Rule 3, a manufacturer or producer of a final product or a provider of output service would be allowed to take the Cenvat credit on the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act. Sub-rule (1) of Rule 3 which gives the concession of availment of Cenvat credit of the duty paid, also uses the same expression "duty of excise"as is used in the proviso which restricts or limits the right of availment of such facility under certain circumstances. The expression "duty of excise"used in clause (i) of sub-rule (1) of Rule 3 and the above noted proviso to the said rule, must receive same interpretation. The term "duty of excise"cannot have different connotations for the purpose of sub-rule (1) of Rule 3 and for the purpose of proviso to the Rule Thus, if we accept the contention of the counsel for the assessee that the countervailing duty would not be included in the expression "duty of excise"for the purpose of the said rule, the assessee's very foundation of claiming the benefit of Cenvat credit would disappear.