Judgment Intelligence
Petition DismissedUnion of India v. Hindustan Zinc Ltd. (and connected appeals)
2026:RJ-JD:48182-DB
D.B. Central/excise Appeal No. 5/2022 with D.B. Central/excise Appeal Nos. 4/2022, 6/2022, 7/2022 and 8/2022
- Court
- Rajasthan High Court
- Date of Decision
- 5 October 2026
- Bench
- Chief Justice Sanjay K. Agrawal and Justice Baljinder Singh Sandhu
- Relevant Acts & Sections
- CENVAT Credit Rules, 2004 — Rule 3(1)(i), 3(1)(vii); Customs Tariff Act, 1975 — Section 3; Central Excise Tariff Act, 1985; Customs Notification No. 12/2012-Cus; Central Excise Notification No. 12/2012-CE
Final Outcome
The five appeals by the Union of India dismissed; the substantial question of law answered in favour of the assessee and against the Revenue; parties to bear their own costs (paras 16-17).
Key holdings
- Credit of CVD paid on imported steam coal under Customs Notification No. 12/2012-Cus is admissible (para 16).
- Conditions attached to excise-duty credit under Rule 3(1)(i) cannot be imported into the credit of CVD (para 12).
- The Regional Advisory Committee, Hyderabad Zone, had treated such credit as eligible in 2015 (para 13).
- The Court relied on the Calcutta High Court's decision in Shyam Steel Industries on the same questions (paras 14-15).
- The question of law was answered for the assessee and the five appeals dismissed without costs (paras 16-17).
Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.
Brief Facts
Hindustan Zinc, a producer of zinc and lead concentrates, runs captive thermal power plants on imported steam coal, on which it paid CVD at a concessional rate under Serial No. 122A/123 of Customs Notification No. 12/2012-Cus and took CENVAT credit (paras 4.1-4.2, 9). Five show cause notices for its Zawar, Chanderia and Rajpura Dariba units, covering April 2012 to June 2017, alleged breach of Rule 3 of the CENVAT Credit Rules, and the Commissioner, Udaipur confirmed the demands on 26.02.2019 (paras 4.3-4.4). CESTAT, New Delhi allowed the company's appeals on 02.09.2021, and the High Court admitted the Revenue's appeals on a substantial question of law (paras 3, 4.5-4.7).
Court's Findings
The Court explained that Rule 3(1)(i) allows credit of excise duty under the First Schedule subject to the two exclusions in its proviso, while a separate clause allows credit of additional duty leviable under Section 3 of the Customs Tariff Act equivalent to the listed excise duties (paras 10-11). It accepted the Tribunal's finding that the company had paid additional duty of customs under the Customs Notification, had not paid excise duty under the First Schedule and had not availed the excluded Central Excise notifications, so the Commissioner had mixed up the two clauses (para 12). The Revenue could not substantially question that finding (para 13). The Court also relied on the minutes of the Regional Advisory Committee, Hyderabad Zone, of 09.02.2015, which treated CVD paid at 2% on imported coal under the Customs Notification as eligible for credit (para 13), and on the Calcutta High Court's answers to the same questions in Shyam Steel Industries (paras 14-15). The Tribunal's findings were based on the material on record (para 16).
Legal Principle
CENVAT credit of additional duty of customs paid on imported goods at a concessional rate under a Customs notification is admissible under the clause of Rule 3(1) dealing with that duty; the exclusions in the proviso to Rule 3(1)(i), which concern excise duty under specified Central Excise notifications, cannot be read into it (paras 11-12, 16).
Precedents Relied Upon
- Commissioner of CGST & CX Bolpur Commissionerate v. M/s. Shyam Steel Industries Ltd. IA No. GA/01/2022, decided 05.09.2022 (Calcutta High Court)
The Calcutta High Court dismissed the Revenue's appeal and held CENVAT credit of 1%/2% CVD paid on imported coal under Notification No. 12/2012-Cus admissible.
- Hindalco Industries Ltd. v. GST, Bhopal 2018 (363) E.L.T. 1085 (Tri.-Del.)
Relied on by the Tribunal: no prohibition under Rule 3(1)(vii) against CENVAT credit where additional duty of customs is paid after availing the Customs Notification.
