2015 (3) TMI 292 - AT - Central Excise

Waiver of pre deposit - Demand of interest - wrong availment of CENVAT credit - Held that - Considering the Hon ble Supreme Court s decisions in the case of Ind-Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court) and the Hon ble Madras High Court s decision in the case of Sundaram Fasteners Ltd. (2014 (2) TMI 551 - MADRAS HIGH COURT), the appellants are prima facie has not made out a case for full waiver of interest. Regarding the contention of the learned counsel for the appellants on the issue of time-bar, the same will be examined at the time of final hearing. It is also seen from the impugned order, the appellant has admitted that if at all any interest liability arises, it should be for the period from July 2007 to November 2007 and the amount of interest is approximately ₹ 1.20 lakhs - Partial stay granted.

Summary

Issues:
- Application for waiver of predeposit of interest
- Demand of interest for wrong availment of CENVAT credit
- Contention of time-bar for interest liability

Analysis:
The case involves an application for the waiver of predeposit of interest by the appellant, who was issued a show-cause notice for the recovery of interest amounting to Rs. 6,27,921 due to erroneous availment of CENVAT credit on export of services as a commission agent. The adjudicating authority confirmed the demand of interest, which was upheld by the Commissioner (Appeals), leading to the present appeal.

The appellant argued that they had voluntarily rectified the erroneous availment of credit during a specific period and reversed the credit accordingly. They contended that the show-cause notice issued in May 2009, beyond one year from the relevant period, should be considered time-barred. The appellant cited various decisions in support of their position.

On the contrary, the Revenue, represented by the learned AR, asserted that interest payment is automatic upon the irregular availment of credit, irrespective of reversal, and cited legal precedents to support this stance. The Revenue argued that once the credit is found ineligible and reversed, interest payment becomes mandatory without the need for a separate notice.

After hearing both sides, the Tribunal focused on the specific issue of interest demand for the wrongful availment of CENVAT credit. Referring to relevant decisions of the Hon'ble Supreme Court and the Hon'ble Madras High Court, the Tribunal found that the appellant had not established a strong case for a full waiver of interest. The Tribunal agreed to examine the time-bar contention during the final hearing. Notably, the appellant had acknowledged a potential interest liability for a specific period, approximately amounting to Rs. 1.20 lakhs.

Based on the facts presented, the Tribunal directed the appellant to predeposit Rs. 1,20,000 within eight weeks towards the total interest amount, with the remaining balance being waived upon such deposit. The recovery of the waived amount was stayed pending the appeal process.