Cenvat credit on concessional CVD for imported coal eligible despite excise notification restrictions, as Customs notifications impose no bar.

JUDGMENT :

N. ANAND VENKATESH, J.

The present case has been filed by the Department under Section 35- G of the Central Excise Act, 1944, against the final order dated 22.09.2021 passed by the Customs, Excise and Service Tax Appellate Tribunal, Southern Zonal Bench, Chennai.

2. The respondent was engaged in the manufacture of printing and writing paper and they also hold Central Excise Registration. They import steam coal, which is used by them for generation of steam / electricity which is in turn used in relation to the manufacture of the final products. With effect from 01.03.2011, the steam coal was levied with central excise duty at the rate at 5% ad valorem vide Notification No.2/2011-CE dated 01.03.2011. However, the concessional rate at 1% ad valorem was available for steam coal as per the Notification No.1/2011-CE dated 01.03.2011 (Serial No.28) subject to the condition that such concessional rate of duty shall not apply to the goods in respect of which Central Excise Duty on inputs or Service Tax on input services has been taken under the provision of Cenvat Credit Rules, 2004.

3. The respondent paid 2% CVD on the imported coal and availed credit for the said CVD.

4. The Department was of the view that in terms of Rule 3 of the Cenvat Credit Rules (CCR) 2004, such credit is not eligible. Accordingly, show cause notice was issued proposing to recover the wrongly availed credit along with the interest and for imposing penalty. After getting the explanation, the authority confirmed the demand, interest and penalty. Aggrieved by the same, the appeal was filed before the Customs, Excise and Service Tax Appellate Tribunal by the respondent.

5. The CESTAT through the impugned order dated 22.09.2021, allowed the appeal and set aside the order passed by the Commissioner of Central Excise and Service Tax dated 05.01.2016. Aggrieved by the same, the present appeal has been filed.

6. When notice was ordered by this Court, no substantial question of law was framed. Hence, when the matter was taken up for hearing today, this Court heard both sides to ascertain as to whether any substantial question of law is involved in this case.

7. The learned Senior Standing Counsel appearing on behalf of the appellant submitted that the respondent was not eligible for the Cenvat Credit availed on the import of steam coal in terms of Sub Rule 1 of Rule 3(1) of the Cenvat Credit Rules 2004, since the Cenvat Credit is not allowed if exemption has been taken under the Notification No.12 of 2012 dated 17.03.2012. The learned counsel also relied upon Clause-VII of Rule 3 which deals with the additional duty leviable under Section 3 of the Customs Tariff Act , equivalent to the duty of excise. The learned counsel submitted that the Tribunal did not take into consideration these specific provisions and had erroneously allowed the appeal.

8. Per contra, the learned counsel for the respondent placed before this Court the judgment of the Calcutta High Court in the case of Commissioner of CGST and C. Ex. Bolpur Commissionerate Vs. Shyam Steel Industries Limited reported in 2022 (382) ELT 329 (Calcutta) and submitted that the issue involved is squarely covered by the judgment.

9. In the judgment that was relied upon by the learned counsel appearing for the respondent, the following substantial questions of law were framed by the Calcutta High Court:

“Whether the respondent is eligible to avail Cenvat Credit availed in respect of 1%/2% (concessional rate) Additional Duty of Customs (CVD) paid on imported coal in terms of Notification No. 12/2012-cus., dated 17.03.2012 and 12/2013-Cus., dated 01.03.2013, in view of restriction for avail