Commisioner of GST&CE(Salem) vs Agni Steels Private Limited

Court
Customs, Excise and Service Tax Appellate Tribunal

IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI

Excise Miscellaneous Application No. 41922 of 2018
and
Excise Appeal No. 41890 of 2018

(Arising out of Order-in-Appeal No. 89/2018 SLM-CEX dated 10.5.2018
passed by the Commissioner of GST and Central Excise (Appeals),
Coimbatore @ Salem)

Commissioner of GST & Central Excise Appellant
No. 1 Foulk’s Compound, Anai Road
Salem – 636 001.

Vs.

Agni Steel Pvt. Ltd. Respondent
Sponge Iron Division
SF 632, Olappalayam Road
Ingur – 638 058l, Perundurai (Tk)

APPEARANCE:

Smt. O.M. Reena, Authorized Representative for the Appellant
Shri S. Venkatachalam, Advocate for the Respondent

CORAM

Hon’ble Shri P. Dinesha, Member (Judicial)
Hon’ble Shri M. Ajit Kumar, Member (Technical)

FINAL ORDER NO. 40985/2026

Date of Hearing: 16.03.2026
Date of Decision: 03.09.2026

Per M. Ajit Kumar,

This appeal is filed by the appellant-department against Order-
in-Appeal No. 89/2018 SLM-CEX dated 10.5.2018 passed by the
Commissioner of GST and Central Excise (Appeals).
Brief Facts
2. The brief facts of the case are that the respondent-assessee is
engaged in the manufacture of sponge iron falling under Chapter 72 of
the First Schedule to the Central Excise Tariff Act, 1985 and avails

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CENVAT credit of duty paid on inputs, input services and capital goods
under the CENVAT Credit Rules, 2004 ( CCR 2004 ), which is utilised
towards payment of duty on the final products. During the period June
2011 to September 2015 , the respondent availed CENVAT credit of
CVD amounting to ₹ 1,60,20,657/- paid on imported steam coal. The
Department took the view that CVD paid at the rate of 1%/2% ad
valorem on the imported steam coal was not admissible as CENVAT
credit, in contravention of Rule 3 of the CCR 2004. Accordingly, Show
Cause Notice dated 02.02.2016 was issued proposing recovery of the
said amount under Rule 14 of the CCR 2004 read with Section 11A(4)
of the Central Excise Act, 1944, along with interest and penalty. A
further Statement of Demand dated 01.11.2016 was issued for the
period October 2015 to March 2016, proposing recovery of ₹ 6,66,356/-
on the same ground, along with interest and penalty. After
adjudication, the Adjudicating Authority confirmed CENVAT credit
demand of ₹ 84,65,519/- under Rule 14 of the CCR 2004 read with
Section 11A(10) of the Central Excise Act, 1944, along with an equal
penalty under Rule 15(2) of the CCR 2004 read with Section
11AC(1)(c) of the said Act, and dropped the proceedings in respect of
the balance demand. Aggrieved by the confirmation of demand,
interest and penalty, the respondent preferred an appeal before the
Commissioner (Appeals). The Commissioner (Appeals) allowed the
appeal and set aside the Order-in-Original . Aggrieved by the said
order, the Department has filed the present appeal. The respondent
has filed cross-objections thereto.

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3. The Ld. Authorized Representative Smt. O.M. Reena appeared
for the appellant-department and Ld. Advocate Shri S. Venkatachalam
appeared for the respondent.
Submissions made by the Appellant-Revenue
3.1 Smt. O.M. Reena the ld. AR took us through the OIO and
submitted that:
A. Section 3 of the Customs Tariff Act, 1975 provides for CVD
equivalent to the effective excise duty leviable on a like article
manufactured in India. Accordingly, the exemption/concessional
notifications applicable to domestic goods, along with the conditions
and restrictions attached thereto, equally apply to imported goods.
B. Under Rule 3(1)(i) of the CENVAT Credit Rules, 2004, CENVAT
credit is barred where duty is paid at the concessional rate. Thus,
where domestic steam coal attracts an effective rate of 1%, no credit
is available; the same restriction must apply where imported steam
coal bears CVD at the concessional rate of 1%/2%. A contrary view
would defeat the legislative intent of maintaining parity between
domestic and imported goods.
C. The Government’s 2012 instructions reinforce this position. While
the general concessional rate was increased from 1% to 2%, goods
under heading 2701 (coal) were excluded, and CVD on steam coal was
simultaneously reduced from 5% to 1%. The concessional rate was
expressly linked to non-availment of credit.
D. Accordingly, the CENVAT credit availed by the assessee on CVD
paid on imported steam coal at the concessional rate is inadmissible

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and is liable to be disallowed. Hence the impugned Order may be set
aside and the OIO restored.
Submissions made by the Respondent
3.2 Shri S. Venkatachalam the ld. Advocate for the respondent
supporting the cross-objection, and submitted that:
A. The Department’s appeal is not sustainable either on facts or in
law. The credit was availed on 2% CVD paid under Sl. No. 122A of
Notification No. 12/2012-Cus. dated 17.03.2012, and not under Sl. No.
67 of Notification No. 12/2012-CE, as alleged in the SCN. Since there
is no corresponding Sl. No. 122A in the Central Excise notification, the
credit is not hit by the proviso to Rule 3(1)(i) of the CCR, 2004.
B. Rule 3(1)(vii) of the CCR, 2004 has no application. Customs and
Central Excise exemption notifications operate independently, and the
Customs notification did not restrict or prohibit availment of CENVAT
credit of the 2% CVD paid. No condition or restriction not contained in
the notification can be read into it, nor can a tax liability be imposed
on the basis of inference, analogy or assumption.
C. The issue was also clarified in the Regional Advisory Committee
Meeting held at Hyderabad on 09.02.2015. Further, the Orders-in-
Original relied upon by the Department have already been set aside by
the Tribunal in M/s JSW Steel Ltd. - Final Order F. No. 40716/2021
dated 13.01.2021, M/s Seshasayee Paper and Boards Ltd. - Final
Order Nos. 40021 & 40022 dated 08.01.2026, and other similar orders
of the Chennai Bench, including Chettinad Cements - Final Order
Nos. 40586 to 40588/2024 dated 31.05.2024 .

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D. Accordingly, the Department’s appeal deserves to be rejected as
unsustainable in law and on facts .
Extract from the Order-in-Appeal
4. We have gone through the impugned order and find the order to
be reasoned, legal and proper. Relevant paragraphs are extracted:
“07.05 As per the Section 3(8) of the Customs Tariff
Act, 1975 the provisions of Customs Act, Rules and
regulations made thereunder relating to exemption from
duties shall apply to duty chargeable under Section 3(1) of
Customs Tariff Act. Section 3(8), ibid, reads as, 'the
provisions of the Customs Act, 1962 (52 (8) of 1962) and
the Rule and regulations made there under, including those
relating to drawbacks, refunds and exemption from duties
shall, so far as may be apply to the duty chargeable under
this section as they apply in relation to the duties leviable
under that Act'. Additional duty is levied in terms of Section
3 of the Custom Tariff Act and the exemption there from is
granted in terms of Section 25 of the Customs Act, 1962
and thus the rate of additional duty of customs is
determined by the exemption notifications issued under the
Customs Act, 1962 and the rate shall in no case exceed the
Excise duty levied on like goods manufactured in India.

07.06 The Government of India has brought in
CENVAT Credit (amendment) Rules 2011 by issuance of
Notification No. 3/2011 CE(NT) dated 01.03.2011 to insert
an amendment to the provisions of Rule 3(1)(i) of CENVAT
Credit Rules 2004. By these amendment, a clear restriction
was set in place to prohibit availment of CENVAT Credit of
duty of excise paid in terms of exemption Notn. No.
01/2011-CE dated 01.03.2011 and duty paid on goods
specified in serial numbers 67 and 128, in respect of which
the benefit of an exemption under Notn. No.12/2012-CE
dated 17.03.2012 is availed. However, I find no such
amendment was either inserted or brought in by the Union
of India to the provisions of Rule 3(1)(vii) which gave
statutory backing to avail CENVAT credit of the additional
duty leviable under Section 3 of the Customs Tariff Act,
1975 equivalent to the duty of excise specified under clause
(i), (ii), (iii), (iv), (v), (vi) and (via). Thus, the restriction
imposed on availment of CENVAT Credit of duty of excise
paid @ 1% on steam coal continued, but the legal position
of no restriction imposed on availment of CENVAT Credit of
additional duty paid on imported steam coal also continued
and still continuing. The exclusion contained at proviso to
Rule 3(1)(i) of CENVAT Credit Rules 2004, which is specific

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to duty of excise, is clearly not applicable to the additional
duty of Customs.

07.07 Under Customs Notification No. 12/2012-Cus
dated 17.3.2012 as amended by Notification No. 12/2013-
Cus dated 01.03.2013 which was issued under Section 25
of the Customs Act, 1962, imported steam coal attracts CVD
@ 2%. The preamble of the Notn. No. 12/2012-Cus clearly
states that goods described in the notification falling within
the chapter, heading, sub-heading or tariff item of the first
schedule to the Customs Tariff Act, 1975 are exempt from
duty of customs leviable thereon under the First Schedule
to the Tariff as in excess of duty specified in column 4 of the
table and so much of the additional duty (CVD) leviable
under Section 3 of the Act as in excess of the additional duty
rate specified in the corresponding column 5 of the table.
Since there is no condition in the customs notification under
which 2% CVD has been paid, the LAA cannot bind the
appellant with any condition which is absent both in CENVAT
Credit Rules and in the customs notification. There is no
provision under any law to charge CVD under customs
notification and impose conditions as per Central Excise
notification.

07.08 Further, it is not out of place to mention here
that only for the payment of such duty the measure is from
the excise duty payable on like articles produced or
manufactured in India. This does not mean that the CVD
which is the additional duty of customs cannot be reduced
for the importers and as already pointed out, Section 25 of
the Customs Act, 1962 gives the power to the government
to issue exemption notifications subject to any condition for
duty of customs. Notification 12/2012-Cus dated
17.03.2012 as amended by Notn.No.12/2013-Cus dated
01.03.2013 under which they have paid the effective rate of
2% CVD is one such notification. Moreover, Rule 3(1)(vii) of
CCR, 2004 indicates that additional duty leviable under
section 3(1) of the Customs Tariff Act, 1975 would be
eligible to credit.

*

09. It is also pertinent to note here that Rule 3(1) of the
CENVAT Credit Rules, 2004 which is the relevant provision
in the instant case, does not stipulate any restriction or
prohibition in respect of availment of CENVAT credit on CV
Duty paid @2% under Notification 12/2012-Cus as
amended. The same is not the case with excise duty paid
under Excise Notifications referred above. Rule 3(1)(i)
specifically, in express terms, exempt such assessees who
have availed the benefit of exemption under Notification No.
1/2011-C.E dated 01.03.2011 or excise duty paid on goods

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specified in serial nos. 67 and 128 in respect of which the
benefit of an exemption under Notification 12/2012-C.E is
availed, from taking CENVAT credit of duty of excise paid.
However there is no mention about CVD paid under
Notification 12/2012-Cus as amended by Notn.
No.12/2013-Cus under which the appellant has paid CVD
and availed credit. That being the case, I fear that the LAA's
conclusion that the appellant is ineligible to avail CENVAT
credit in respect CVD paid on imported Steam Coal is not
sustainable in law.

10. As already stated, the Customs Notification 12/2012-
Cus dated 17.03.2012 as amended by Notn. No.12/2013-
Cus dated 01.03.2016 does not restrict or prohibit availment
of CENVAT credit of CV Duty paid @ of 2%. When the
Notification prescribing the rate of CV Duty, does not impose
any condition or prohibition, the same cannot be read into
the notification for the purpose of denying the benefit of
CENVAT credit. It is a settled principle of law that any
restriction or prohibition or condition must be stated in
express terms and not proper in law to contend that, such
a restriction or prohibition is implied.

5. We find that the dispute has been examined by a Coordinate
Bench of this Tribunal recently in M/s Seshasayee Paper and
Boards Ltd. Vs Commissioner of GST and Central Excise (supra).
The Order examines the issue in detail and relevant paragraphs are
extracted below:
“ 7. We have heard the rival submissions advanced by
both the sides and have carefully perused the appeal
records, the impugned orders, the statutory provisions and
the case Laws relied upon by the Appellant as well as the
Respondent. Upon consideration of the entire material on
record, the following issues arise for our determination as
to: -

i. Whether CENVAT credit of 1% / 2% CVD paid on
imported steam coal is admissible under Rule 3(1)(vii) of
CCR, 2004?

ii. Whether conditions in Central Excise exemption
notifications can be imported into Customs notifications?
iii. Whether the extended period under Section 11A (4)
is invocable?

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iv. Whether penalty under Rule 15(2) read with Section
11AC is sustainable?

*
9.3 We have heard both the sides. We find that
Section 3(1) of the Customs Tariff Act levies
Additional Duty of Customs, which remains a customs
duty, though measured with reference to excise duty.
Rule 3(1)(vii) clearly allows credit of “the additional duty
leviable under Section 3 of the Customs Tariff Act”. There is
no qualification in the Rule that credit is admissible only if
CVD is paid at the tariff rate and not at a concessional rate.
The argument that “equivalent” means “tariff rate only”
finds no support in the statutory text.

Whether conditions in Central Excise exemption
notifications can be imported into Customs
notifications?

10.1 The Appellant contends that the proviso to Rule 3(1)(i)
refers only to duty of excise paid under specific Central
Excise notifications and Customs Notification No. 12/2012-
Cus does not prescribe any condition barring availment of
credit. It is impermissible in law to read conditions
from one notification into another, particularly across
two different taxing statutes.

10.2 According to the Department, concessional rates of
duty are intended only when credit is not availed, and such
intent must be read harmoniously into the CCR.

10.3 On going through the rival submissions, we find that
the proviso to Rule 3(1)(i) applies exclusively to duty of
excise. Customs Notification No. 12/2012-Cus is
issued under Section 25 of the Customs Act, 1962 and
does not impose any restriction on credit. It is settled
law that conditions cannot be read into a notification
when none exist.

10.4 We find that the Hon’ble Supreme Court has held in the
case of Hansraj Gordhandas v. H.H. Dave, AIR 1970 SC
755 that exemption notifications must be interpreted strictly
and no additional conditions can be implied. Therefore, the
denial of credit by importing excise side restrictions into
customs notifications is legally unsustainable. We also
observe that the Appellant has submitted that the issue is
no longer res integra and placed reliance on the following
decisions:

i. Chettinad Cements & Ramco Cements Ltd. v.
CCE, 2024 (6) TMI 13 – CESTAT Chennai

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ii. Chettinad Cement Corporation Pvt. Ltd. v. CCE,
2023 (11) TMI 57 – CESTAT Chennai

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

iv. CCE, Vs Shyam Steel Industries Ltd. 2022 (382)
ELT 329 (Cal.)

v. Hindustan Zinc Ltd. V.CCE, 2020 (10) TMI 1032
– CESTAT

vi. Commissioner of CGST & CE, Jodhpur v. M/s.
J.K. Lakshmi Cement Ltd. 2024 (1) TMI 769 CESTAT

vii. NALCO Ltd. v. CCE, 2025 (1) TMI 526 – CESTAT
Kolkota

viii. M/s. Jindal Steel &s Power Ltd. v. Commissioner
of Central Tax, GST & CEx., Rourkela 2025 (4) TMI
880 CESTAT Kolkota

10.5 We have perused the above decisions and find that
the very same issue has been examined and decided in
favour of Appellant in a series of judgments, including those
of this Bench.

10.6 From the above judicial pronouncements, we
find that the issue involved in the present appeals is
no longer res integra. The consistent view taken by
this Tribunal as well as affirmed by the Hon’ble
Calcutta High Court is that CENVAT credit of 1% / 2%
Additional Duty of Customs (CVD) paid on imported
coal is admissible under Rule 3(1)(vii) of the CENVAT
Credit Rules, 2004, and that conditions prescribed
under Central Excise exemption notifications cannot
be imported into or superimposed upon Customs
notifications for the purpose of denial of such credit.

10.7 In Shyam Steel Industries Ltd. [2022 (382) ELT
329 (Cal.)], the Hon’ble High Court has unequivocally held
that CVD levied under Section 3 of the Customs Tariff Act
retains its character as a customs duty and that restrictions
contained in Central Excise notifications have no application
to duties levied under the Customs law. The said judgment,
being of a High Court, is binding and squarely applicable to
the facts of the present case.

10.8 Further, this very Bench, in Chettinad Cements &
Ramco Cements Ltd. v. CCE [2024 (6) TMI 13 – CESTAT
Chennai], after an elaborate examination of the statutory

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provisions and earlier precedents, has held that CENVAT
credit on 1% / 2% CVD paid on imported steam coal under
Notification No. 12/2012-Cus dated 17.03.2012 is legally
admissible. The Tribunal therein followed the decisions in
Chettinad Cement Corporation Pvt. Ltd . and Tamil
Nadu Newsprint & Papers Ltd. , and set aside the
demands raised by the Department by holding that such
CVD payments qualify for CENVAT credit.

10.9 We also note that the said view has been consistently
followed in subsequent decisions, including Hindustan Zinc
Ltd., J.K. Lakshmi Cement Ltd., NALCO Ltd., and Jindal
Steel & Power Ltd., thereby establishing a clear and
uniform line of authority on the issue.

10.10 In view of the above, and in keeping with the
principle of judicial discipline and certainty in tax
administration, we find no justification to take a view
different from the one consistently adopted by this Tribunal
and affirmed by the Hon’ble High Court. Accordingly, we
hold that the denial of CENVAT credit in the impugned
Orders-in-Original is unsustainable in law.”
(emphasis added)

6. The principle of judicial consistency and comity requires us to
follow the decision of a Coordinate Bench on the same issue,
particularly when there is nothing on record to indicate that the
decision has been set aside, modified or otherwise varied.
Conclusion
In the circumstances, we reject the appeal and it stands disposed
accordingly along with the cross-objection.
(Order pronounced in open court on 03.09.2026)



Sd/- Sd/-
( M. AJIT KUMAR ) ( P. DINESHA )
Member (Technical) Member (Judicial)


Rex