2017 (10) TMI 699 - AT - Central Excise

Demand of interest - suo-moto reversal of CENVAT credit - Restoration of appeal - non-appearance of appellant - Held that - When the appellant has voluntarily reversed the credit, they ought to have reversed with interest. Once the appellant has come to know of the irregular excess credit they ought to have reversed it along with interest without waiting for a show cause notice. The liability to pay interest is automatic and continuous till the duty is paid. This being so the appellant cannot deliberately abstain from paying the interest on the excess credit and then take shelter that the demand is time-barred - appeal dismissed - decided against appellant.

Summary

Issues:
- Restoration of appeal seeking reversal of the judgment based on non-appearance and merits of the case.
- Liability of appellant to pay interest on excess credit availed and reversed.
- Invocation of extended period for demand of interest.

Analysis:
1. Restoration of Appeal:
The appellant sought restoration of the appeal, arguing that non-appearance on the final hearing date was unintentional and that they had not sought any adjournment previously. The appellant contended that the demand was based on irregularly availed credit, which was voluntarily reversed. The appellant claimed that since they reversed the excess credit without waiting for a show cause notice, there was no intention to evade duty. However, the respondent opposed the restoration application, emphasizing that the appellant had utilized the wrongly availed credit and failed to pay interest on it. The respondent argued that the liability to pay interest is continuous and not time-barred, as the appellant only reversed the credit but not the interest portion.

2. Liability for Interest on Excess Credit:
The Tribunal noted that the appellant had indeed availed excess credit, which was later reversed voluntarily. However, the appellant failed to reverse the interest on the excess credit, which is considered a continuous liability until the duty is paid. The Tribunal emphasized that the appellant should have reversed the excess credit along with interest immediately upon discovery of the irregularity. The appellant's argument that the demand for interest was time-barred was dismissed, as the liability to pay interest is automatic and continuous until the duty is settled.

3. Invocation of Extended Period:
Regarding the invocation of the extended period for the demand of interest, the Tribunal upheld that the extended period was rightly invoked due to the continuous nature of the liability for interest on the wrongly availed credit. The Tribunal concluded that the appellant's failure to pay interest on the excess credit, despite voluntarily reversing it, indicated an intention to evade payment, justifying the demand for interest beyond the regular limitation period.

In the final decision, the Tribunal found no grounds to interfere with the impugned Final Order, dismissing the restoration application as devoid of merit. The judgment highlighted the importance of promptly addressing liabilities such as interest on irregularly availed credit to avoid accusations of deliberate evasion.