2016 (12) TMI 582 - AT - Central Excise

Chargeability of the interest on wrong availment of Cenvat Credit amounting to ₹ 35,14,493/- - Held that - there is direct ruling on this issue by the Hon ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. 2011 (2) TMI 6 - Supreme Court , where it has been held that where Cenvat Credit is taken OR utilized wrongly, the same along with the interest is to be recovered from manufacturer or the provider of the output service. The Hon ble Supreme Court in the said case specifically lays down that even when the Cenvat Credit has not been utilized, though taken wrongly the liability of interest would arise for the period when it was lying in the account of the assessee - appeal disposed off - decided against assessee.

Summary

Issues:
Chargeability of interest on wrong availment of Cenvat Credit.

Analysis:

Issue 1: Chargeability of interest on wrong availment of Cenvat Credit

The case involved two appeals filed by M/s Shree Cement Ltd. against a common order-in-original passed by the Commissioner Central Excise Jaipur-II regarding the chargeability of interest on the wrong availment of Cenvat Credit amounting to ?35,14,493. The appellant argued that since they reversed the entire Cenvat Credit without utilizing it, interest should not be charged. The appellant cited the decisions of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court to support their argument. On the other hand, the department reiterated the findings in the impugned order and stated that interest liability arises when credit is wrongly taken by the assessee. They cited various case laws to support their stance.

Upon careful consideration of the facts, submissions, and case laws cited, the Tribunal noted that the Cenvat credit was indeed wrongly taken by the appellant and later reversed without utilization. The key issue was whether there is a liability of interest for the period when the credit was lying in the appellant's account. The Tribunal referred to the Hon'ble Supreme Court's decision in Union of India vs. Ind-Swift Laboratories Ltd., where it was held that even if the credit was not utilized but taken wrongly, interest liability would still arise for the period it remained in the account of the assessee. The Tribunal emphasized that the appellant's cited case laws did not entitle them to interest relief as the Supreme Court's decision was clear on the matter. The Tribunal also referred to the decisions of other High Courts to support their conclusion.

In conclusion, the Tribunal rejected both appeals based on the precedent set by the Hon'ble Supreme Court and other High Court decisions. The impugned order was sustained, and the liability for interest on the wrong availment of Cenvat Credit was upheld.

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