2007 (6) TMI 445 - AT - Central Excise

Summary

Issues:
- Appellant availed 'One Time Transitional Credit' on stock of goods as on 31-3-2003.
- Appellant reversed the amount in RG 23A Part-II Account on 31-12-2003 due to calculation error.
- Show cause notice issued for confirmation, appropriation of amount, penalty, and interest.
- Adjudicating authority confirmed demand, appropriated amount, ordered interest payment, but no penalty imposed.
- Appeal against imposition of interest.
- Appellant's submission that interest recovery is incorrect as full amount already paid before notice.
- Interpretation of Rule 12 of Cenvat Credit Rules, 2002 regarding recovery of wrongly taken credit and interest.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved the issue of whether the appellant was liable to pay interest on the excess Cenvat credit availed by them for the period from 1-4-2003 to 31-12-2003. The appellant had initially availed 'One Time Transitional Credit' on the stock of goods as of 31-3-2003 but later reversed an amount in their RG 23A Part-II Account on 31-12-2003, citing a calculation error. The adjudicating authority confirmed the demand, appropriated the reversed amount, and ordered the appellant to pay interest without imposing any penalty. The appellant contended that the interest recovery was unjust as they had already paid the entire excess Cenvat credit amount before the show cause notice was issued. The Tribunal examined Rule 12 of the Cenvat Credit Rules, 2002, which mandates the recovery of wrongly taken or erroneously refunded Cenvat credit along with interest. The Tribunal emphasized that the provision clearly states that interest shall be recovered from the manufacturer in such cases. Consequently, the Tribunal upheld the order-in-appeal, rejecting the appellant's appeal against the interest payment.

In the Tribunal's analysis, the key point revolved around the interpretation of Rule 12 of the Cenvat Credit Rules, 2002, which explicitly outlines the recovery of Cenvat credit wrongly taken or erroneously refunded, along with the imposition of interest. The Tribunal highlighted that the provision mandates the recovery of interest from the manufacturer in cases where Cenvat credit was availed incorrectly. The Tribunal found no grounds for interference in the order-in-appeal, emphasizing the clear language of the rule regarding interest payment. As a result, the Tribunal dismissed the appeal, affirming the requirement for the appellant to pay interest on the excess Cenvat credit availed, despite the appellant's argument that the full amount had been paid before the issuance of the show cause notice.

Therefore, the Tribunal's decision was based on the strict interpretation of Rule 12, emphasizing the statutory requirement for the recovery of interest on wrongly taken Cenvat credit, ultimately leading to the rejection of the appellant's appeal against the interest payment imposed by the adjudicating authority.