2017 (6) TMI 202 - AT - Central Excise

Liability of interest - credit in respect of input used in the manufacture of non dutiable goods which was subsequently reversed - whether in terms of Rule 14 interest is chargeable from date of taking credit or from utilization of the credit? - Held that - the issue has been considered in case of Ind-Swift Laboratories Ltd 2011 (2) TMI 6 - Supreme Court , wherein Hon ble Supreme Court interpreting Rule 14 held that as per term taking credit or utilization in both cases interest is chargeable therefore as per the Hon ble Supreme Court ruling interest is chargeable from the date of taking credit - As regard the penalty of ₹ 50,000/-, it is observed that against huge amount of Cenvat credit of ₹ 1,92,86,034/- adjudicating authority by giving substantial relief penalty imposed is only of ₹ 50,000/- which in my view is very reasonable and does not require any interference - appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand of interest on Cenvat credit availed for non excisable goods.
2. Imposition of penalty under Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Demand of Interest on Cenvat Credit:
The case involved M/s. Cipla Ltd, engaged in manufacturing P.P. Medicines falling under chapter 30042013 and non excisable goods within the same premises. The appellant availed Cenvat credit for inputs used in manufacturing non dutiable goods, which was later reversed. The adjudicating authority demanded a Cenvat credit of &8377; 1,92,86,037/-, along with interest of &8377; 14,62,497/- and a penalty of &8377; 50,000/-. The appellant contested the interest and penalty in their appeal. The appellant argued that since the credit was correctly availed and remained unused, interest should not be charged. They cited various judgments to support their claim.

Appellant's Argument:
Ms. Anjali Hirawat, representing the appellant, contended that interest should not be charged as the credit was correctly availed and remained unused. She argued that Rule 14 applies only when credit is wrongly availed, which was not the case here. The appellant relied on several judgments to support their position.

Revenue's Argument:
On the other hand, Shri. S.V. Nair, representing the Revenue, reiterated the findings of the impugned order. He argued that as per Rule 14, interest is chargeable from the date of availing credit, whether for utilization or taking credit. He contended that the appellant wrongly availed credit as they were aware that the inputs were for non excisable goods. He cited judgments to support the Revenue's position.

Decision:
The tribunal noted conflicting judgments on whether interest is chargeable from the date of taking credit or utilization. Referring to the Ind-Swift Laboratories Ltd case, the tribunal held that interest is chargeable from the date of taking credit, as per the Supreme Court ruling. The tribunal upheld the impugned order, dismissing the appeal against the demand of interest and the penalty of &8377; 50,000/-, considering the substantial relief given by the adjudicating authority.

Issue 2: Imposition of Penalty:
The penalty of &8377; 50,000/- under Rule 15 of the Cenvat Credit Rules, 2004 was imposed by the adjudicating authority. The tribunal found the penalty reasonable given the substantial amount of Cenvat credit involved. The tribunal upheld the penalty and dismissed the appeal.

In conclusion, the tribunal upheld the impugned order, confirming the demand of interest and the imposition of the penalty. The appellant's appeal was dismissed, considering the legal interpretations and precedents cited during the proceedings.