ESSAR STEEL LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE issue referred to the Larger Bench is whether mere debit in the DEPB Pass Book is sufficient for the eligibility of Modvat credit availed on the strength of Bills of Entry wherein the importers availed of the benefit of Notification 34/97 -Cus. dated 7 -4 -1997 which exempts duties of customs (both basic plus additional) when the duty leviable on the goods is debited to the DEPB .

(2.) WE have heard both sides. Under the DEPB Scheme credit is given to exporter in the Duty 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 issued by DGFT. In case entire duty payable cannot be debited 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 assessee/appellant availed the benefit of Notification 34/97 -Cus. whereby it was exempted from payment of duty of customs.