2013 (11) TMI 1629 - AT - Central Excise

Summary

Issues involved: Appeal against order disallowing credit availed by the respondent u/s central excise registration for manufacture of excisable goods, and imposition of interest but no penalty.

The judgment addresses the issue of whether interest is attracted when wrongly availed credit remains unused. The respondents had obtained central excise registration for manufacturing excisable goods but had not installed necessary machinery. Instead, they installed a biomass power plant and availed Cenvat credit on items used in the plant. Three show cause notices were issued for recovery of credit availed. The lower authority disallowed the credit and ordered interest recovery but no penalty. The respondents reversed the credit but contested interest imposition since it was not utilized. The Commissioner (Appeals) allowed the appeal, citing Tribunal decisions that no interest is confirmed if wrongly availed credit remains unused.

The judgment refers to the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Pune v. SKF India Ltd., which was considered by the Hon'ble Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, Bangalore v. Bill Forge Pvt. Ltd. The courts held that if the credit availed is reversed before utilization, no interest liability arises. Following this precedent, it was held that the respondents are not liable to pay any interest. Consequently, the appeals filed by the Revenue were rejected.