2017 (12) TMI 1019 - AT - Central Excise

Demand of interest - case of appellant is that though there is a mistake in carrying forward of closing balance of 31st March as opening balance in the month of April, 2009 they have reversed the excess amount of ₹ 8,52,596/-therefore mistake stands corrected, hence no interest is chargeable - Held that - appellant have reversed excess amount of ₹ 8,52,596/- in the month of April, 2009 as against excess balance shown on 1st April, 2009 of ₹ 5,61,411/-. Therefore wrongly availed excess credit of ₹ 5,61,411/- stands reversed in the same month therefore there is no question of interest liability - appeal allowed - decided in favor of appellant.

Summary

Issues: Incorrect reporting of opening balance, demand for interest and penalty, appeal against Order-in-Original, reversal of excess amount, incorrect calculation of balance, applicability of interest liability.

Analysis:

1. The case involved an error where the appellant mistakenly reported an excess opening balance on 1st April, 2009, while carrying forward the closing balance of 31st March, 2009. This error led to a demand for interest of &8377; 3,59,734 under Section 11AB and penalty under Rule 15 of Cenvat Credit Rules, 2004. The adjudicating authority initially dropped the proceedings considering the appellant's submission that the excess amount had been reversed. However, the Revenue appealed before the Commissioner (Appeals) who modified the Order-in-Original to hold the appellant liable for interest but did not impose a penalty.

2. The appellant contended that they had rectified the mistake by reversing the excess amount in the same month of April, 2009, and therefore, no interest should be charged. The appellant argued that they had not utilized the excess Cenvat credit, and hence, interest should not apply. On the other hand, the Revenue reiterated the findings of the Commissioner (Appeals) and highlighted discrepancies in the calculations of the excess payment.

3. Upon careful consideration of the submissions and records, the Member (Judicial) found that the appellant had indeed reversed the excess amount of &8377; 8,52,596 in the month of April, 2009, correcting the wrongly availed excess credit of &8377; 5,61,411. The Member noted that the Revenue's appeal was based on incorrect figures, and since the excess amount had been paid in the same month, there was no basis for interest liability. Therefore, the Member set aside the Commissioner (Appeals) order, ruling in favor of the appellant and allowing the appeal.

4. The judgment clarified that the incorrect reporting of the opening balance was rectified by the appellant within the same month, leading to the reversal of the excess amount and negating the need for interest payment. The decision emphasized the importance of accurate calculations and timely corrections to avoid unnecessary liabilities under the Cenvat Credit Rules.