Per Mr. VASA SESHAGIRI RAO

This appeal arises out of Order-in-Original No. 05/2017 dated 27.04.2017 passed by the Commissioner of Central Excise, (Audit), Coimbatore (hereinafter referred to as the “Impugned Order”), whereby CENVAT credit of Rs.3,17,74,936/- availed by M/s. Sree Rengaraj Ispat Industries Pvt. Ltd. Erode (hereinafter referred to as the “Appellant”) on CVD paid on imported steam coal has been disallowed along with interest imposing equal penalty. The Appellant, engaged in manufacture of iron and steel products, imported steam coal for captive use.

2. The facts, in brief, are that during the period from 01.04.2013 to 31.10.2015, the Appellant paid Additional Duty of Customs (CVD) at the concessional rate of 2% on imported steam coal under Notification No. 12/2012-Cus and availed CENVAT credit of the same under Rule 3 of the CENVAT Credit Rules, 2004. On verification of records, the Department formed a view that concessional excise duty applicable to indigenous coal under Notification No. 1/2011-CE and Notification No. 12/2012-CE, being subject to the condition of non-availment of credit, would equally apply to imported goods, and accordingly issued Show Cause Notice dated 22.04.2016 proposing recovery of CENVAT credit amounting to Rs. 3,17,74,936/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, along with interest under Section 11AA and imposition of penalty under Rule 15(2) read with Section 11AC. The Appellant contested the proceedings, contending that there is no restriction in law for availment of credit of CVD paid under Notification No. 12/2012-Cus and that conditions applicable to excise duty cannot be extended to CVD. However, the adjudicating authority rejected the contentions and confirmed the demand along with interest and equal penalty.

3. Aggrieved by the Impugned Order, the Appellant is before this Tribunal in appeal.

4. The Ld. Advocate Mr. M. Karthikeyan appeared on behalf of the Appellant and advanced arguments in support of the appeal. The Ld. Authorized Representative Ms. G. Krupa appeared for the Respondent/Department and supported the findings in the Impugned Order.

5. The Ld. counsel for the Appellant submitted that Rule 3(1)(vii) of the CENVAT Credit Rules, 2004 specifically permits availment of credit of additional duty of customs and that there is no statutory restriction denying such credit when the duty is paid at concessional rate under a customs notification. It was contended that the Department has erroneously imported conditions applicable to excise duty into the scheme governing CVD without any legal basis. It was further submitted that the scheme of Section 3 of the Customs Tariff Act creates a legal fiction whereby imported goods are to be treated as if manufactured in India and that such fiction must be applied fully and consistently. Reliance was placed on several judicial pronouncements, including the decision of the Tribunal in M/s. Seshasayee Paper and Boards Ltd. v. Commissioner of GST & Central Excise, Salem 2026 (1) TMI 508 – CESTAT Chennai wherein it has been consistently held that CENVAT credit of Additional Duty of Customs paid at concessional rates under Notification No. 12/2012-Cus is admissible and that conditions prescribed under Central Excise exemption notifications cannot be imported into Customs notifications. It was submitted that the aforesaid decisions have uniformly settled the legal position in favour of the Appellant/assessees and that the issue involved in the present case is no longer res integra.

6. The Ld. Authorized Representative Ms. G. Krupa for the Department supported the findings in the impugned order and contended that additional duty of customs is in the nature of excise duty and therefore subject to the same restrictions. It was argued that concessional rate of duty under the relevant notifications is conditional upon non-availment of credit and that such condition must be read into the C