2015 (10) TMI 1663 - AT - Central Excise

Demand of interest - CENVAT Credit - whether interest is payable on the Cenvat Credit availed wrongly and subsequently reversed. - Held that - Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, Bangalore Vs. Bill Forge Pvt Ltd - 2011 (4) TMI 969 - KARNATAKA HIGH COURT and the Hon ble Madras High Court in the case of the Commissioner of Central Excuse, Madras vs M/s Strategic Engg. (P) Ltd - 2014 (11) TMI 89 - MADRAS HIGH COURT after considering the decision of the Hon ble Supreme Court in the case of Ind-Swift Laboratories (2011 (2) TMI 6 - Supreme Court) held that mere taking credit itself and reversal, would not compel the assessee to pay interest an rejected the appeals of Revenue. - Decided against Revenue.

Summary

Issues: Whether interest is payable on wrongly availed and subsequently reversed Cenvat Credit.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad, delivered by Mr. P.K. Das, deals with the issue of whether interest is payable on Cenvat Credit wrongly availed and subsequently reversed. The respondent did not appear, and an application for adjournment was made. The Tribunal examined the impugned order and referred to a case where it was held that interest is not levied on unutilized credit. The appellant argued that they had sufficient balance in their Modvat Credit account, indicating the unutilized amount. The Authorized Representative for the Revenue cited a Supreme Court case where it was held that interest is payable on irregularly availed Cenvat credit even if not utilized. Additionally, a Division Bench decision was referenced. The Tribunal mentioned judgments by the Karnataka and Madras High Courts, which held that mere taking credit and reversal does not mandate payment of interest, rejecting the Revenue's appeals.

In conclusion, the Tribunal found no merit in the Revenue's appeal and rejected it based on the discussions and precedents cited. The judgment emphasizes the distinction between availing credit and actual utilization, highlighting that the mere act of reversal may not always attract interest payment, as established by various judicial decisions.