2013 (2) TMI 469 - AT - Central Excise

Reversal of CENVAT credit wrongly taken - seeking stay in respect of the interest and penalty - Held that - In as much as the appellant is not disputing the tax liability they cannot dispute the liability to pay interest as the interest is a consequential liability on account of delay in payment of tax. Thus the appellant directed to make a pre-deposit of interest liability within six weeks and report compliance on 26.10.2012. On such compliance being reported, pre-deposit of penalty is waived and recovery thereof stayed during the pendency of the appeal

Summary

Issues:
Appeal against Order-in-Appeal, Stay application, Admissibility of CENVAT credit, Recovery of wrongly taken credit, Interest and penalty imposition, Tax liability not disputed.

Analysis:
The judgment pertains to an appeal and stay application against Order-in-Appeal No. US/231/RGD/2012 dated 11.04.2012 issued by the Commissioner of Central Excise (Appeals), Mumbai. The appellant, M/s. Sandoz Pvt. Ltd., had availed CENVAT credit amounting to Rs.6,31,914/- on goods and services, which included items like HDPE pallets, office furniture, ceramic tapes, and F.R.P. Linings on pipes, as capital goods and for repair, maintenance, security agency services for a housing colony. Upon realizing that the CENVAT credit was wrongly taken, the appellant reversed the credit. Subsequently, the department issued a notice for recovery of the wrongly taken credit, leading to confirmation of the demand along with interest and imposition of a penalty. The appeal before the lower appellate authority was rejected, prompting the appellant to approach the Tribunal.

The appellant's representative submitted that the CENVAT credit wrongly taken had already been paid, requesting a stay on interest and penalty. It was clarified that the appellant did not dispute the tax liability. On the other hand, the Revenue's representative reiterated the lower authorities' findings, emphasizing that since the tax liability was not disputed, the appellant should comply with the terms set forth.

Upon careful consideration of the submissions, the Tribunal observed that since the appellant did not dispute the tax liability, they could not contest the liability to pay interest, which arises due to the delay in tax payment. Consequently, the Tribunal directed the appellant to make a pre-deposit of the interest liability within six weeks and report compliance by a specified date. Upon compliance with the interest pre-deposit, the pre-deposit of penalty was waived, and recovery thereof stayed during the pendency of the appeal.