2017 (1) TMI 1850 - AT - Central Excise

Recovery of interest - reversed CENVAT credit - goods destroyed and availed remission of duty whether in the facts and circumstances of the case interest is applicable on the credit availed on the inputs which were used in the manufacture of finished products but later the finished goods were destructed being unusable and remission of duty allowed on the finished goods? - interpretation of statute. Held that - I do not find any stipulated therein requiring the assessee to reverse the interest on the amount of CENVAT credit availed on the inputs that were used in manufacture of finished goods allowed to be destroyed after permitting remission of duty under Rule 21 of Central Excise Rules 2002. It is settled principle of law that the taxing statute to be read as it is without addition or subtraction of the words to cull out the meaning - reliance placed in the case of M/s. Greatship (India) Ltd. Versus Commissioner of Service Tax Oil and Natural Gas Company Ltd. 2015 (4) TMI 1006 - BOMBAY HIGH COURT where it was held that It is equally settled that a taxing statute is required to be strictly construed. Common sense approach equity logic ethics and morality have no role to play while interpreting the taxing statute. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether interest is applicable on the credit availed on inputs used in the manufacture of finished products later destructed?
2. Interpretation of Rule 5C of CCR, 2004 regarding reversal of CENVAT credit.
3. Application of literal interpretation in taxing statutes.

Analysis:
1. The appeal was against an order demanding interest on reversed CENVAT credit of inputs used in manufacturing pharmaceutical products later destroyed. The appellant reversed the credit before seeking remission of duty on the destroyed goods. The main issue was whether interest was applicable in this scenario.

2. The appellant argued compliance with Rule 5C of CCR, 2004 by reversing the credit on inputs used in manufacturing finished goods before seeking remission of duty. The Tribunal analyzed the rule, which mandates reversal of credit when duty is remitted on final products. The Tribunal found no requirement to reverse interest on the credit under the rule in the given circumstances.

3. The Tribunal emphasized the literal interpretation of taxing statutes. Referring to a High Court case, it highlighted the principle that taxing statutes should be strictly construed without adding or subtracting words. The judgment emphasized that if a person falls within the statute's language, they must be taxed, regardless of perceived hardships. Equitable considerations are not relevant in interpreting taxing statutes. The Tribunal applied this principle to the case and set aside the order demanding interest on the reversed credit.

In conclusion, the Tribunal allowed the appeal, finding no merit in demanding interest on the reversed CENVAT credit of inputs used in manufacturing finished goods later destructed. The judgment underscores the importance of adhering to literal interpretation in taxing statutes and upheld the appellant's compliance with Rule 5C of CCR, 2004.