Countervailing Duty - MODVAT credit - CVD paid through DEPB - Notification No.34/97 - Whether the duty debit made in Duty Entitlement Pass Book in respect of countervailing duty can be allowed as MODVAT/ CENVAT credit and was it not contrary to the Notification No. 34/97 and to the provision of Rule 3 of CENVAT Credit Rule, 2002 - Held that - It is no doubt true that under the Scheme available from 1.4.2000, there is a specific prohibition that wherever the additional customs duty is adjusted from DEPB, the assessee would not be entitled to CENVAT/ Drawback. However, in the absence of any such specific prohibition for the period prior to 2000, considering the provision under Paragraph 7.25 that a holder of DEPB shall have the option to pay additional customs duty if any, in cash, the provision under Paragraph 7.41 could only be read as recognising payment in cash too available for adjustment under MODVAT Scheme. Thus, in the absence of any restrictive wording, we do not find any justification to deny the benefit of MODVAT credit available to a case covered by the credit taken under the Passbook Scheme. In the background of DEPB Scheme and the purpose of MODVAT Scheme, we hold that availing of credit is as good as tax payment for the purpose of Rule 57Q of the Central Excise Rules. Scope of Notification No.34 of 1997 dated 01.04.1997 - Held that - in view of the limited scope of exemption, the Notification cannot be construed as a non-liability for the purpose of claiming MODVAT credit. Read in the context of the decision of the Supreme Court in EICHER MOTORS LIMITED v. UNION OF INDIA 1999 (1) TMI 34 - SUPREME COURT OF INDIA and the policy relevant to the period in this case, in the absence of any prohibition in Clause 7.41 of the Export and Import Policy with Handbook of procedures as well as under Rule 57Q of the Central Excise Rules, the assessee will be entitled to relief under Rule 57Q of the Central Excise Rules, irrespective of whether the duty is paid in cash or through credit entry in the passbook. - Decided in favour of Assessee............................... Central Excise - Case Law
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