2018 (3) TMI 451 - AT - Central Excise

CENVAT credit - carry forward of credit - Rule 57 F (17) (b) of CER - Held that - the credit was not carried forward by the Appellant by complying with Rule 57 F (17) (b) in year 1997. They did not challenge the lapse of such credit thereby accepting the compliance with the said Rule. It is only after 9 years that they availed credit suo moto which is bad in law. When the lapse of the credit was not challenged by them and they accepted the lapse of credit in that case they could not have taken suo moto credit. Therefore they are not entitled for the credit. Interest on unutilized credit - Held that - the Appellant has utilized the portion of credit which was availed in the year 2006. During the said period the Rule 14 provided for payment of interest in case where the credit was taken or utilized wrongly - appellant liable to pay interest. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Availability of unutilized credit balance in the books of accounts.
2. Applicability of interest on unutilized credit.
3. Compliance with Rule 57F (17) (b) in availing credit.
4. Entitlement of credit after a lapse of unutilized credit.
5. Liability to pay interest on wrongly availed credit.

Issue 1: Availability of unutilized credit balance:
The appellant, engaged in the manufacture of Bulk Drugs and Vitamins, did not carry forward an unutilized credit of ?1,35,41,134 in the books of accounts after a budget change in 1997. They later availed this credit based on a Tribunal judgment but were issued a show cause notice proposing disallowance of the credit.

Issue 2: Applicability of interest on unutilized credit:
The appellant argued that interest cannot be demanded on unutilized credit, citing various judgments. The Revenue contended that interest is payable, referring to a High Court judgment. The Tribunal found that interest liability accrues from the date of taking irregular credit and held the appellant liable to pay interest.

Issue 3: Compliance with Rule 57F (17) (b) in availing credit:
The Tribunal noted that the appellant did not challenge the lapse of credit in 1997, accepting compliance with Rule 57F (17) (b). Availing credit after 9 years without challenging the lapse was deemed unlawful, leading to a denial of credit entitlement.

Issue 4: Entitlement of credit after a lapse of unutilized credit:
The Tribunal held that since the appellant accepted the lapse of credit in 1997 without contesting it, they were not entitled to avail the credit after 9 years. Taking suo moto credit after such acceptance was considered impermissible.

Issue 5: Liability to pay interest on wrongly availed credit:
Regarding the payment of interest, the Tribunal found that the appellant had utilized a portion of the credit in 2006. Citing relevant judgments, the Tribunal determined that interest is payable from the date of wrong availment of credit, in line with High Court and Supreme Court decisions. Consequently, the appellant was held liable to pay interest.

In conclusion, the Tribunal rejected the appeal, emphasizing the inadmissibility of the credit availed by the appellant after accepting the lapse earlier and affirming the liability to pay interest on wrongly availed credit.

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