CENVAT credit admissible on concessional CVD under Section 3 Customs Tariff Act; eligibility based on levy nature, not rate.

Per Mr. VASA SESHAGIRI RAO

The present appeal arises out of Order-in-Original No. 33/COMMR/CE/2017 dated 14.12.2017 passed by the Commissioner of Central Excise & Service Tax, Trichy, whereby CENVAT credit amounting to Rs.3,63,85,392/- along with interest and penalty of Rs.2,42,57,680/- was confirmed against the appellant.

1.2 Facts briefly stated are that M/s India Cements (hereinafter referred to as “the Appellant”) is engaged in the manufacture of clinker and cement and is availing CENVAT credit under the provisions of the CENVAT Credit Rules, 2004. The dispute in the present case relates to availment of CENVAT credit on Countervailing Duty (CVD) paid on imported steam coal under Notification No. 12/2012-Cus dated 17.03.2012, as amended by Notification No. 12/2013- Cus dated 01.03.2013. The Department’s case is that the CVD paid at concessional rates of 1% / 2% under the said notification is not “equivalent to duty of excise” and, therefore, not eligible for credit under Rule 3(1)(vii) of the CENVAT Credit Rules, 2004.

1.3 Based on the above, proceedings were initiated for the period from September 2012 to June 2017, which culminated in confirmation of demand, interest and penalty as mentioned in Para 1, leading to the present appeal.

2. The Ld. Advocate Shri Raghav Rajeev appeared on behalf of the Appellant. The Ld. Authorized Representative Ms. O.M. Reena, appeared for the Revenue.

3. The Ld. Counsel for the Appellant submitted that: -

i. the issue is no longer res integra and stands settled in favour of the assessee by several Tribunal decisions.

ii. CVD is levied under Section 3(1) of the Customs Tariff Act and is in the nature of customs duty, though measured with reference to excise duty. Therefore, credit eligibility depends on the nature of levy, not the rate or quantum.

iii. Rule 3(1)(vii) of CCR permits credit of “additional duty leviable under Section 3 of the Customs Tariff Act” without any qualification that it must be at tariff rate.

iv. Reliance is placed on the following decisions: -

a. Seshasayee Paper and Boards Ltd. vs Commissioner of GST & CE, Salem, 2026 (1) TMI 508 – CESTAT Chennai

b. Shyam Steel Industries Ltd. vs Commissioner of CGST, 2022 (382) E.L.T. 366 (Tri.-Kolkata), affirmed in 2022 (382) E.L.T. 329 (Cal.)

c. Tamil Nadu Newsprint & Papers Ltd., 2021 (10) TMI 13 – CESTAT Chennai

d. Chettinad Cement Corporation Pvt. Ltd., 2023 (11) TMI 57 – CESTAT Chennai e. Rungta Mines Ltd., 2025 (10) TMI 1035 – CESTAT Kolkata f. Hindalco Industries Ltd., 2018 (363) E.L.T. 1085 v. It was also argued that TRU Circular and CBEC Circular relied upon by the Department cannot override statutory provisions.

vi. On limitation, it is contended that the issue is interpretational and all facts were disclosed in returns; hence extended period is not invokable. Reliance is placed on Pushpam Pharmaceuticals Co. vs CCE, 1995 (78) E.L.T. 401 (S.C.).

4. The Ld. Authorized Representative reiterated findings of the impugned order and it was further submitted that concessional CVD is not equivalent to excise duty and hence credit is not admissible. It is further argued that the appellant availed CENVAT credit wrongly and hence demand along with penalty is justified.

5. We have carefully heard the submissions advanced by both sides, examined the appeal records in detail, considered the statutory provisions and the case laws cited.

6. Upon consideration the following questions arise.

i. Whether CENVAT credit is admissible on CVD paid at concessional rate under Notification No. 12/2012-Cus. and,

ii. Whether the demand is sustainable on merits and limitation.

7. We now proceed to examine the issues arising for determination in the present appeal, one by one, seriatim.

ISSUE (i): Admissibility of CENVAT Credit on CVD

8.1 The principal issue that arises for consideration in the present appeal is whether the appellant is entitled to avail CENVAT credit of Countervailing Duty (CVD) pai