9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (2) TMI 551 - HC - Central ExciseReversal of Credit availed but not utilized - Tribunal pointed out that the credit though taken was not utilised till its reversal and therefore deleted interest and penalty - The Tribunal being creation of the Statute, whether it can traverse beyond the provisions of Cenvat Credit Rules, 2004, when the same has the force of a statute - Held that - Though Rule 14 contemplates that Cenvat Credit taken shall be recovered from the manufacturer along with interest the facts of the present case are slightly different as there was no allegation that there was intention on the part of the assessee to evade payment of duty by wrongly availing the credit. Therefore, the provisions of Section 11AC of the Act could not have been invoked by the revenue for the purpose of levy of penalty. Whether the aforesaid word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court - Held that - where CENVAT credit has been taken and utilized wrongly, interest should be payable from the date the CENVAT credit has been utilized wrongly for according to the High Court interest cannot be claimed simply for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty - A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. Therefore, the question of quantum of demand, should not be a going factor, more so, when a substantial question of law is involved - while confirming the order of the Tribunal on the levy of penalty under Section 11AC, we reverse the order of the Tribunal on the question of interest, as per Rule 14 read with Section 11AB and restore the order of the adjudicating authority levying interest - Decided partly in favour of Revenue.
Issues Involved:
1. Whether the Tribunal can traverse beyond the provisions of Cenvat Credit Rules, 2004. 2. Validity of Cenvat credit availed on CTD bars used for construction purposes. 3. Imposition of penalty and interest for wrongful availment of Cenvat credit. 4. Applicability of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. 5. Relevance of the quantum of demand in the context of substantial questions of law. Detailed Analysis: 1. Tribunal's Authority Beyond Cenvat Credit Rules, 2004: The core issue addressed was whether the Tribunal, being a statutory creation, can traverse beyond the provisions of the Cenvat Credit Rules, 2004. The Tribunal's decision to delete interest and penalty was challenged on the grounds that it exceeded its jurisdiction by not adhering strictly to the statutory provisions. 2. Validity of Cenvat Credit on CTD Bars: The respondent/assessee was issued a show cause notice for availing Cenvat credit on CTD bars used for construction, which was contested as incorrect. The assessee argued that the CTD bars were used for the foundation of heavy machinery, qualifying them as "inputs" under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004. However, the adjudicating authority and the first appellate authority rejected this claim, confirming that CTD bars used in civil construction do not qualify as "inputs" for the final product. 3. Imposition of Penalty and Interest: The Tribunal's deletion of interest and penalty was based on the fact that the credit, although availed, was not utilized. The assessee contended that there was no intention to evade duty and that the credit remained static in their account. The Tribunal's decision was challenged by the revenue on the grounds that Rule 14 mandates recovery of Cenvat Credit along with interest, irrespective of utilization. 4. Applicability of Rule 14 and Section 11AB: The Supreme Court's decision in Union of India vs. Ind-Swift Laboratories Ltd. (2011) clarified that Rule 14 should not be read down and that interest is applicable from the date of wrongful availment of Cenvat Credit, not just from the date of utilization. The High Court upheld this interpretation, stating that any wrongful availment of credit necessitates recovery with interest, aligning with the statutory provisions of Rule 14 and Section 11AB. 5. Relevance of Quantum of Demand: The assessee argued for dismissal of the appeal based on the smallness of the amount involved, referencing circulars that prescribe monetary limits for filing appeals. However, the court held that substantial questions of law necessitate consideration regardless of the quantum involved, citing precedents where the Supreme Court emphasized the importance of addressing significant legal issues over monetary thresholds. Conclusion: The High Court confirmed the Tribunal's order on the non-imposition of penalty under Section 11AC but reversed the Tribunal's decision on the question of interest. The court reinstated the adjudicating authority's order, mandating the payment of interest as per Rule 14 read with Section 11AB, emphasizing that statutory provisions must be strictly followed, and substantial legal questions must be addressed irrespective of the monetary amount involved.
|
