2013 (8) TMI 428 - AT - Central Excise

Interest on wrong availment of Cenvat Credit Appellant availed ineligible Cenvat Credit Held that - As per the Hon ble apex Court in the case of Ind-Swift Laboratories Ltd. 2011 (2) TMI 6 - Supreme Court , - there is no difference between the expression credit taken and the credit utilised for the purpose of recovery of wrongly availed credit Rule 14 of Cenvat Credit Rules, and if any credit has been taken wrongly, even though not availed, interest liability would accrue Interest payable on the wrong availment of Cenvat Credit Decided against the Assessee.

Summary

Issues involved:
- Short payment of service tax
- Availing ineligible Cenvat Credit
- Imposition of penalties

Short payment of service tax:
The appellant, a mining services provider, was found to have short paid service tax and availed ineligible Cenvat Credit. A show-cause notice was issued, leading to a confirmed service tax demand of Rs.14,40,039. The appellant had paid Rs.13,10,752 before the order was passed. The appellant argued that they should not pay back the ineligible Cenvat Credit as they had not utilized it. The Revenue supported the adjudicating authority's findings. The Bench queried if the appellant had reversed the wrongly taken Cenvat Credit, to which the reply was negative. The Tribunal directed the appellant to reverse the credit taken and pay interest on the amount until reversal, amounting to Rs.15 lakhs. The difference between the confirmed amount and the amount paid was attributed to input/input service credit taken by the appellant.

Availing ineligible Cenvat Credit:
The appellant argued that they should not repay the ineligible Cenvat Credit of Rs.47,79,078 as they had not utilized it. However, the Tribunal found that since the credit was not reversed and still reflected in the appellant's accounts, they must reverse it immediately. Interest liability of Rs.15 lakhs was imposed on the appellant for the period from taking the credit until reversal. The Tribunal differentiated the appellant's case from a precedent where interest liability did not arise due to no duty payment liability, emphasizing that in this case, the appellant had taken the credit but not utilized it, leading to interest liability as per Cenvat Credit Rules.

Imposition of penalties:
Penalties were imposed on the appellant for short payment of service tax, ineligible Cenvat Credit, and under Sections 76 and 77 of the Finance Act, 1994. Additionally, a penalty of Rs.5,000 was imposed on the Director of the appellant firm. The Tribunal did not find grounds for a complete waiver of the dues adjudged against the appellant. They directed the appellant to make a pre-deposit of Rs.15 lakhs within eight weeks, with the balance amount waived upon compliance, and recovery stayed during the appeal's pendency. The Tribunal's decision upheld the liabilities imposed on the appellant, emphasizing the importance of adhering to tax regulations and reversing any wrongly taken credits promptly.