2017 (3) TMI 1137 - AT - Central Excise

CENVAT credit - parallel flange beam/column used in the manufacture of crane, discharge, chute, crane, gantry, crane column etc - trailer truck - interest - Held that - the appellant M/s Jindal Steel & Power Ltd. is entitled to Cenvat credit on the subject inputs as the same have been used for manufacturing of capital goods which in turn have been used for manufacture of final product (sponge iron and hot re-rolled products) by the appellant company. The subject inputs are covered by the definition of input as laid down in Rule 2 (k) of CCR, 2004 - credit allowed. Interest - Held that - The appellant has taken Cenvat credit wrongly/ inadvertently or on account of clerical errors / short receipt of material etc. though the same was reversed later - considering the Hon ble Supreme Court s decision in the case of Ind-Swift Laboratories 2011 (2) TMI 6 - Supreme Court , the interest on the Cenvat credit amount for the period, when it was lying in the account of the assessee, is liable to be paid - the matter is remanded to the original adjudicating authority who shall decide the issue of amount of interest. Appeal allowed - part matter on remand for quantification - decided in favor of assessee.

Summary

Issues:
- Denial of Cenvat credit on certain inputs used in manufacturing
- Liability of interest on Cenvat credit lying in account but later reversed

Analysis:
1. Denial of Cenvat Credit:
The appellant, M/s Jindal Steel & Power Ltd., filed appeals against orders denying Cenvat credit on specific inputs used in manufacturing various products. The Tribunal found that the inputs were indeed used for manufacturing capital goods, which, in turn, were used in the final products. Referring to previous CESTAT orders and Supreme Court decisions, the Tribunal concluded that the appellant was entitled to Cenvat credit for the subject inputs. Therefore, the impugned orders were modified, and the appeal was partly allowed in this regard.

2. Liability of Interest on Cenvat Credit:
The appellant contested the liability of interest on the inadmissible Cenvat credit amount, arguing that they had not utilized the credit despite it being in their account and later reversed. The Tribunal considered arguments from both sides and analyzed relevant case laws. It was observed that the appellant had taken the Cenvat credit erroneously or due to clerical errors, even though it was reversed later. Referring to Rule 14 of the Cenvat Credit Rules, the Tribunal highlighted that interest is payable when Cenvat credit is taken or utilized wrongly, regardless of whether it was reversed before utilization. Citing decisions from the Madras High Court and Chhattisgarh High Court, the Tribunal held that interest on the wrong credit amount is warranted as per the rules. The matter of computing the interest liability was remanded to the original adjudicating authority for further assessment within a specified timeframe.

In conclusion, the Tribunal modified the impugned orders and partly allowed the appeals, granting Cenvat credit for the subject inputs and affirming the liability of interest on the Cenvat credit amount that was erroneously taken and later reversed.