Aculife Healthcare CVD Credit denied

The dispute arose from imports undertaken by AculifeHealthcare Pvt. Ltd. under 36 Advance Licences between 1995 and 1999. Since the assessee failed to fulfil export obligations under the Advance Licence Scheme, proceedings were initiated before the Customs & Central Excise Settlement Commission. Pursuant to the Settlement Commission’s final order dated 27.11.2007, the assessee discharged customs duty liabilities aggregating to approximately Rs. 17.48 crores, which included substantial Countervailing Duty (CVD) components.

Following such payment, the assessee sought Modvat/Cenvat credit/refund of approximately Rs. 822.89 lakhs representing CVD allegedly paid pursuant to the Settlement Commission’s directions. The matter travelled through multiple rounds of adjudication and remand before the Department and Tribunal.

Ultimately, the Commissioner (Appeals) allowed Cenvat credit of Rs. 752.22 lakhs but denied credit of Rs. 70.67 lakhs pertaining to imports made under Notification No. 79/95-Cus dated 31.03.1995 on the ground that the notification exempted only Basic Customs Duty and not CVD. According to the Department, the disputed amount did not actually represent CVD liability arising under the relevant notification structure.