VISAKHAPATNAM STEEL PLANT Vs. CCE

JUDGEMENT

(1.) This appeal arises from Order -in -OriginaJ (Adjudication Order) No. 18/99 -ASR dated 17.8.1999 by which the appellants have been denied benefit of Modvat credit in terms of Rule 57A on inputs. The appellants have been availing of the exemption under Notification No. 34/97 -Cus. dated 7.4.1997 (Duty Entitlement Pass Book (DEPB) Scheme) in respect of imports and exports effected by them. The said notification exempts goods imported under the DEPB Scheme from the whole of the duty of Customs and the whole of the Additional Duty leviable under Section 3 of the Customs Act, 1975, when specifically claimed by the Importer subject, inter -alia, to the following conditions

(2.) We have heard both sides. Under the DEPB Scheme credit is given to exporter in the Duly Entitlement Pass Book by the DGFT authorities when the goods are exported. Credit obtained by an exporter can be used to discharge import duty liability on the goods imported. The scheme is basically a brain child of Commerce Ministry. In order to facilitate importers availing of the Scheme, the Govt. of India. Ministry of Finance issued Notification No. 34/97 -Cus. which exempts duties of customs leviable on imported goods provided such duties are debited to credit available in the pass book for want of requisite balance the importer is required to discharge balance duty by cash payment. During the relevant period Para 7.41 of the EXIM Policy prescribed that the additional customs duty paid in cash on inputs cleared under DEPB Scheme can be adjusted as Modvat credit.

(3.) Appellants have taken credit of CVD debited in the Pass Book. It is the contention of the Department that Modvat credit is not admissible when CVD is paid by way of debit in the Pass Book for the reason that the asscssec/appellant availed the benefit of Notification 34/97 -Cus. whereby it was exempted from payment of duty of customs.