2015 (9) TMI 1205 - AT - Central Excise

Demand of interest - Whether the appellant is required to pay interest for the intervening period where they have reversed the cenvat credit taken wrongly by them - Held that - In the case of Bill Forge, the Hon ble Karnataka High Court has taken note of the decision of Hon ble Apex Court in Ind-Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court) and thereafter arrived at the decision that if the cenvat credit lying in the cenvat credit account which has been taken wrongly but reversed before utilization, in that situation, interest is not payable, the said view of the Hon ble High Court of Karnataka was followed by this Tribunal in Gurmehar Construction vs. CCE, Raipur (2014 (7) TMI 849 - CESTAT NEW DELHI). In this case also, it is the contention of the learned Counsel that cenvat credit wrongly taken was lying in the Cenvat credit account unutilized. If the said contention is correct, then the appellant is not required to pay interest on wrongly taken reversed cenvat credit following the decision of Gurmehar Construction vs. CCE, Raipur (supra). The adjudicating authority if desires, may call for the records to verify the fact that during the intervening period, sufficient amount way lying in the cenvat credit account. - Appeal disposed of.

Summary

Issues Involved: Whether appellant is liable to pay interest for wrongly taken cenvat credit reversed before utilization.

Analysis:
The primary issue in this case revolves around determining whether the appellant is obligated to pay interest for the period during which they reversed cenvat credit that was wrongly taken. The Tribunal considered arguments from both sides, with the learned AR citing precedents like Ind-Swift Laboratories Ltd. and Suzuki Motorcycle (I) Pvt. Ltd. In contrast, the appellant's counsel relied on decisions such as Bill Forge Pvt. Ltd. and Gurmehar Construction vs. CCE, Raipur. The Tribunal noted that the Karnataka High Court, in the case of Bill Forge, aligned with the Supreme Court's stance in Ind-Swift Laboratories Ltd., concluding that if wrongly taken cenvat credit is reversed before utilization, no interest is payable. This position was further supported by the Tribunal's decision in Gurmehar Construction vs. CCE, Raipur. The Tribunal emphasized that if the wrongly taken cenvat credit remained unutilized in the account, the appellant would not be liable to pay interest. The adjudicating authority was advised to verify the facts to confirm the presence of sufficient funds in the cenvat credit account during the intervening period. Consequently, the appeal was disposed of based on these considerations.