2018 (1) TMI 1013 - AT - Central Excise

Liability of interest - CENVAT credit availed wrongly, but not utilized - case of appellant is that since the said credit has not been utilized, therefore, interest for the intervening period is not applicable - whether interest is payable on the erroneous Cenvat credit availed during the period September 2008 to January 2009? - Held that - There is no dispute of the fact that the appellant had incorrectly availed Cenvat credit of the amount of additional customs duty and countervailing duty forgone while the capital goods are imported under the EPCG Scheme - Tribunal in the case of Atul Ltd. and others 2017 (4) TMI 217 - CESTAT AHMEDABAD after analyzing the principles of the law laid down in this regard held that erroneous credit availed even if not utilized; interest could be applicable for the normal period of limitation - interest upheld - appeal dismissed - decided against appellant.

Issues:
1. Appeal against demand for interest on excess Cenvat credit availed.

Analysis:

The appellant had erroneously taken excess credit of a significant amount during a specific period on imported capital goods. They voluntarily reversed the credit before being pointed out by the department but failed to pay interest for the wrongful availment. The main issue was whether interest was payable on the erroneous Cenvat credit availed during the mentioned period. The appellant argued that since the credit was reversed, no demand for recovery was issued, making the interest demand unsustainable. They cited various judgments to support their position, including cases from the Karnataka High Court and the Gujarat High Court, emphasizing that interest should not be levied on time-barred demands. However, the Revenue contended that interest should be paid for the erroneous credit availed, even if it was later reversed, as per the normal period of limitation. They highlighted that the principles laid down in previous cases were not directly applicable to the current situation.

After hearing both sides and examining the records, the Tribunal found that the appellant had indeed availed erroneous Cenvat credit, even though it was not utilized. Referring to a previous case involving similar issues, the Tribunal held that interest could be applicable for the normal period of limitation, even if the credit was not utilized. The Tribunal also distinguished the judgments cited by the appellant, stating that they were not directly relevant to the present case. Ultimately, the Tribunal upheld the impugned order, dismissing the appeal for lack of merit. The judgment emphasized the distinction between cases involving excess credit availed but not utilized and those where duty determination was in question, reinforcing the obligation to pay interest on such erroneous credits.

The judgment provided a detailed analysis of the legal principles governing the payment of interest on wrongly availed Cenvat credit, considering both the appellant's arguments and the Revenue's contentions. It clarified the application of previous judgments in similar cases and highlighted the importance of paying interest on excess credits, even if they were voluntarily reversed. The decision underscored the need to adhere to the provisions of the law and the normal period of limitation when dealing with erroneous availment of credits, ultimately upholding the demand for interest in this particular case.

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