2009 (4) TMI 905 - AT - Central Excise

Summary

Issues:
1. Reversal of MODVAT credit on a CNC lathe machine.
2. Imposition of interest and penalty due to delay in reversal of credit.
3. Challenge to the levy of interest.
4. Interpretation of Rule 57U regarding admissibility of credit on capital goods.
5. Applicability of interest for delayed payment of duty.

Analysis:

1. The case involved the removal of a CNC lathe machine during preventive checks, leading to the appellants not reversing the MODVAT credit of &8377; 2,45,100/- availed on the machine. The department directed the reversal of credit, payment of interest, and proposed a penalty. The Additional Commissioner confirmed a demand of &8377; 2,02,802/- and imposed interest and penalty. The Commissioner (Appeals) upheld the order.

2. The Tribunal initially set aside the direction for levy of interest and penalty. However, the Revenue moved the High Court, which remitted the case back to the Tribunal for consideration of interest for the delayed payment period. The Tribunal, upon rehearing, found that the appellants were liable to pay interest due to the delay in reversing the credit, as per Rule 57U.

3. The Tribunal clarified that under Rule 57U, credit is not admissible on capital goods removed as such, necessitating the reversal of credit by the assessee. Even if the goods were removed by a finance company to which dues were owed, the assessee is still required to reverse the credit. The Tribunal referenced a similar case where interest was deemed payable for delayed payment of duty.

4. Given the interpretation of Rule 57U and the requirement for reversal of credit on capital goods removed as such, the Tribunal upheld the authorities' demand for interest. The Tribunal's decision was based on the principle that interest is payable for delayed payment of duty, as established in previous judgments.

5. In conclusion, the Tribunal held that the appellants were liable to pay the interest as demanded by the authorities, thereby upholding the impugned order and dismissing the appeal. This decision was made after a thorough consideration of the relevant rules and legal precedents.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning behind its decision, ensuring a clear understanding of the legal complexities addressed in the case.