CENVAT credit is admissible for CVD paid on imported coal under Customs Notification No. 12/2012.

The respondent, a manufacturer of sponge iron and M.S. ingots, imported steam coal and paid countervailing duty (CVD) at the concessional rate under Customs Notification No. 12/2012-Cus.

It took CENVAT credit of that CVD under Rule 3(1)(vii) of the CENVAT Credit Rules, 2004.

The Department denied the credit, relying on restrictions associated with concessional excise duty on coal under Central Excise Notification No. 12/2012-CE, and raised demands of ₹1,15,11,762 for April 2013–September 2015 and ₹38,44,468 for October 2015–August 2016, with interest and penalties.

The adjudicating authority confirmed the demands; the Commissioner (Appeals) set aside that order.

Revenue appealed to the Tribunal.

Whether CENVAT credit is available for CVD paid at a concessional rate on imported coal under Customs Notification No. 12/2012-Cus, despite restrictions on credit relating to coal cleared under Central Excise Notification No. 12/2012-CE.

Whether the demands, interest and penalties imposed for taking that credit could be sustained.

Rule 3(1)(vii) of the CENVAT Credit Rules, 2004 permits credit of additional duty of customs levied under Section 3 of the Customs Tariff Act, 1975, equivalent to the specified duties of excise.

The restriction in the proviso to Rule 3(1)(i), read with the relevant entries of Central Excise Notification No. 12/2012-CE, applies to the specified excise duty on goods covered by that notification; it does not, without express wording, extend to CVD paid on imported coal under the separate Customs Notification No. 12/2012-Cus.

The Tribunal relied, among other authorities, on Commissioner of CGST v. Shyam Steel Industries Ltd., 2022 (382) E.L.T. 329 (Cal.), which upheld the availability of credit in this context, and on Tribunal decisions including Hindustan Zinc Ltd. v. Commissioner of CGST, 2020-TIOL-1545-CESTAT-DEL.

The Tribunal found that the respondent had paid CVD on imported coal under the customs notification, not excise duty on domestically manufactured coal under the central excise notification.

It therefore held that the restriction directed at specified excise-duty exemptions could not be imported into Rule 3(1)(vii) to deny credit of the CVD paid under the customs notification.

The Tribunal considered this conclusion consistent with the cited decisions, including the Calcutta High Court’s decision in Shyam Steel, and found no basis to distinguish the present facts.

It upheld the Commissioner (Appeals)’ order, found the denial of credit and consequential demand unsustainable, and rejected Revenue’s appeal, granting consequential relief, if any, in accordance with law.