2017 (12) TMI 756 - AT - Central Excise

Demand of interest and penalty - reversal of CENVAT credit - Held that - the appellants have not utilised the cenvat credit availed and they had sufficient credit balance in their CENVAT credit account during the relevant period. The appellant has also produced copies of CENVAT Credit account which shows that sufficient credit was available during the relevant period and further that they have had availed the credit but not utilised the same - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE Versus M/s BILL FORGE PVT LTD, BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT , where it was held that Without the liability to pay duty, the liability to pay interest would not arise - appellant not liable to pay interest - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of wrongly availed CENVAT credit leading to recovery of interest and penalty.

Analysis:
1. The appellant faced allegations of wrongly availing CENVAT credit, prompting the Department to seek recovery. The original authority confirmed the demand, appropriated the credit under Rule 14 of CENVAT Credit Rules, 2004, and ordered interest and penalty under relevant provisions. The appellant's appeals before the Commissioner(Appeals) were rejected, leading to the present appeals.

2. The appellant argued that the demand for interest and penalty was unsustainable, citing a binding judicial precedent and asserting that they had reversed the credit upon audit notification. They maintained a sufficient credit balance during the relevant period, supporting their claim with CENVAT Credit account copies. The appellant contended that as they had not utilized the credit, they were not liable to pay interest. The appellant referenced a Karnataka High Court decision and relevant legal provisions to support their position.

3. The appellant further relied on various cases to strengthen their argument against the demand for interest and penalty. The appellant's consultant presented a case law analysis to demonstrate that the impugned orders were legally unsound.

4. After considering the appellant's arguments and the cited legal precedents, the Judicial Member concluded that the impugned orders were not legally sustainable. Following the rationale of the referenced decisions, the appeals were allowed, overturning the demands for interest and penalty.

5. The judgment was pronounced on 30/10/2017, with the appellant successfully challenging the recovery of interest and penalty based on the legal analysis presented and the precedents cited in their defense.