2005 (5) TMI 606 - AT - Central Excise

Summary

Issues:
- Whether recovery of interest and imposition of penalty should be directed in a case involving CENVAT Credit availed and reversed.
- Interpretation of Section 112(2)(b) of the Finance Act, 2000 regarding the payment of interest on credit of duty.

Analysis:
1. The case involved a dispute over the CENVAT Credit of Rs. 71,820/- availed by the respondent on HSD and reversed in August 2004. The Revenue contended that recovery of interest and imposition of penalty should have been directed by the Assistant Commissioner. However, the Commissioner (Appeals) rejected the appeal of the Revenue, stating that penalty was not imposable as the credit on HSD was taken under Rule 57B and became payable due to a retrospective amendment of the Rule following certain Supreme Court decisions.

2. The Tribunal, after hearing both sides, referred to Section 112(2)(b) of the Finance Act, 2000, which mandates the payment of interest on credit of duty that would not have been allowed to be taken or utilized if certain provisions had been in force at all material times. Considering that the credit was availed during March to May 1997 and reversed in 2004, the Tribunal found that interest of Rs. 72,772/- at a rate of 24% per annum should be payable from the date the Finance Act, 2000 received the assent of the President of India until 31-8-2004.

3. Consequently, the Tribunal allowed the appeal of the Revenue by upholding the claim for interest and modified the impugned order to include the payment of interest as per the provisions of Section 112(2)(b) of the Finance Act, 2000. The decision highlighted the importance of complying with statutory provisions regarding the payment of interest on duty credits to ensure proper enforcement and adherence to the law.