2018 (5) TMI 22 - AT - Central Excise

Liability of interest - inadmissible CENVAT credit - whether the appellant are required to pay interest of ₹ 3,51,442/-for availing inadmissible CENVAT credit during the period July 2011 to August 2015? - Held that - applicability of interest on availment of credit not admissible is required to be paid prior to 17.03.2012 in view of the judgement of this Tribunal in Atul Ltd. & Ors. case 2017 (4) TMI 217 - CESTAT AHMEDABAD . Post amendment to Rule 14 by virtue of N/N. 12/2012-CE (N.T) dated 17.03.2012, interest is required to be paid on inadmissible credit if availed and utilized - refund of interest on the credit reversed after 17.03.2012, is admissible to appellant. Matter remanded to compute the interest amount for the period after 17.03.2012

Summary

Issues involved:
1. Whether the appellant is required to pay interest for availing inadmissible Cenvat credit during a specific period.

Analysis:

The appeal was filed against an order-in-appeal passed by the Commissioner (Appeals) of Central Excise and Service Tax-Vadodara. The main issue in question was whether the appellant needed to pay interest amounting to ?3,51,442 for availing inadmissible Cenvat credit between July 2011 and August 2015. The appellant's representative argued that they had already reversed the credit along with the interest amount. The contention was that no interest was due as there was a sufficient balance in their Cenvat credit account during the relevant period. It was acknowledged that interest was payable for the period before 17.03.2012 based on a previous Tribunal judgment, but post an amendment to the relevant Rule on 17.03.2012, if the credit was reversed, no interest was payable. Therefore, the interest paid after 17.03.2012 was sought to be refunded.

The Revenue's representative supported the findings of the Commissioner (Appeals). The Tribunal, after considering the arguments, noted that interest on inadmissible credit was required to be paid before 17.03.2012 as per a previous Tribunal judgment. However, post the amendment to Rule 14 on 17.03.2012, interest was only required to be paid if the inadmissible credit was availed and utilized. In this case, the Tribunal found that a refund of interest on the credit reversed after 17.03.2012 was permissible for the appellant. The matter was remanded to the adjudicating authority to calculate the interest amount for the period after 17.03.2012. Consequently, the appeal was allowed by remanding it to the adjudicating authority for further proceedings.