2013 (11) TMI 1160 - AT - Central Excise

Ineligible Cenvat credit - Excess credit taken Interest and Penalty Waiver of pre-deposit Assessee contended that for the amount taken as credit and not utilized, no interest is payable - Held that - As regards Penalty, the arguments put-forth by the learned counsel merits acceptance - As regards the interest liability, I find that the issue needs deeper consideration - the appellant needs to put to some condition - the appellant directed to deposit an amount of Rupees twenty five thousand as pre-deposit for the interest upon such submission rest of the interest amount to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Waiver of pre-deposit of interest and penalty amount due to availing ineligible Cenvat credit.
2. Applicability of interest liability and penalty imposition based on the interpretation of relevant legal precedents.

Analysis:
Issue 1: The appellant filed a stay petition seeking the waiver of pre-deposit of interest amounting to Rs. 58,190/- and penalty of Rs. 3,31,398/- imposed for availing ineligible Cenvat credit. The appellant argued that despite availing excess credit, they had sufficient balance in their Cenvat account throughout the period, thus contending that no interest should be payable. Reference was made to the decision of the Hon'ble High Court of Karnataka in the case of Bill Forge Pvt. Limited, which held that no interest is payable on unutilized credit. The appellant also denied any intention to evade duty to justify the penalty imposition.

Issue 2: After considering the submissions of both parties, the judge found merit in the arguments put forth by the appellant's counsel regarding the penalty imposition. However, regarding the interest liability, a deeper examination was deemed necessary. The judge highlighted the need to analyze the judgment of the Hon'ble High Court of Karnataka in detail to ascertain if the factual position in this case aligns with the precedent set in the case of Ind-Swift Laboratories. It was decided that a final disposal of the appeal would be required to delve into this issue further. Consequently, the appellant was directed to make a pre-deposit of Rs. 25,000/- for the interest levied by the lower authorities within four weeks. Compliance was to be reported by a specified date, following which the application for the waiver of pre-deposit of the remaining amounts was allowed, and recovery stayed until the appeal's final disposal.

This judgment underscores the significance of legal precedents in determining interest liability and penalty imposition concerning ineligible Cenvat credit. It also emphasizes the procedural aspect of pre-deposit requirements in appellate proceedings, ensuring a fair and thorough examination of the issues involved before reaching a final decision.