2016 (8) TMI 286 - AT - Central Excise

Demand of interest on reversal of Cenvat credit - common input service Held that - interest required to be paid appeal dismissed - decided partly in favor of revenue.

Summary

Issues:
- Appeal against order-in-Appeal confirming demand of ?4,17,918 only.
- Reversal of cenvat credit on common input services prior to primary adjudication order.
- Applicability of interest on reversed cenvat credit.
- Infructuous nature of respondent's appeal.

Analysis:

1. The appeal was filed by the Revenue against an order-in-Appeal confirming a demand of ?4,17,918 only, as the Commissioner (Appeals) did not uphold the entire demand of ?23,37,973 raised due to the respondent's cenvat credit on common input services used for both dutiable and exempted goods.

2. The respondent's advocate argued that the appellant had reversed the total credit of ?4,17,918 on common input services even before the Order-in-Original was issued, citing a relevant judgment. The contention was that the Revenue's appeal lacked substance due to this reversal.

3. The respondent admitted to reversing the amount prior to the primary adjudication order and claimed in response to the show cause notice that the demand should not be sustained as the entire credit on input services had been reversed. The respondent also filed a cross objection to the Revenue's appeal.

4. The Tribunal considered both sides' arguments and found that the entire cenvat credit on common-input services used for manufacturing both exempted and dutiable goods was indeed reversed before the primary adjudication order was issued. Citing a specific judgment, the Tribunal noted that interest would become payable since the reversal was not done along with interest.

5. The Tribunal deemed the respondent's appeal infructuous as it contested the Revenue's appeal on the grounds that the credit on input services for both dutiable and exempted goods had been reversed before the primary adjudication order, which was already confirmed in the order-in-appeal. Therefore, the respondent's appeal was dismissed as infructuous.

6. In the final decision, the Tribunal partially allowed the Revenue's appeal, directing the respondent to pay interest on the reversed cenvat credit in addition to the already reversed credit amount. The respondent's appeal was dismissed as infructuous, and the matter was disposed of accordingly.