2018 (9) TMI 900 - AT - Central Excise

Demand of Interest - CENVAT credit, availed wrongly, was reversed before utilization - Held that - The appellant had reversed the credit before utilization - the demand of interest and the findings with regard to penalty cannot sustain - reliance placed in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering 2014 (11) TMI 89 - MADRAS HIGH COURT - Demand of Interest do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing wrong CENVAT credit on duty paid on inputs, capital goods, and service tax paid on input services.
2. Recovery of wrongful credit along with interest and penalties.
3. Appeal against the demand, interest, and penalties imposed.

Analysis:
Issue 1: The appellants were engaged in the manufacture of MS billets and TMT bars and availed CENVAT credit on duty paid on inputs, capital goods, and service tax paid on input services. Upon verification, it was found that they had availed wrong credit amounting to ?7,24,326 for the period from July 2011 to March 2012.

Issue 2: A show cause notice was issued to recover the wrongful credit along with interest and penalties. The original authority confirmed the demand and interest but did not specify the penalty imposed. In the appeal, the Commissioner (Appeals) upheld the decision.

Issue 3: The appellant argued that they had immediately reversed the credit upon being pointed out and had sufficient balance in their CENVAT account. The appellant relied on the judgment of the Hon’ble High Court of Madras and a decision of the Tribunal to support their case. After hearing both sides, the Tribunal found that the appellant had indeed reversed the credit before utilization. Citing the decisions relied upon by the appellant's counsel, the Tribunal held that the demand for interest and the findings regarding penalties could not be sustained. The impugned order confirming the interest was set aside, along with the finding on penalty. The appeal was allowed with consequential relief, if any.

This judgment highlights the importance of timely reversal of wrong credits and the legal principles governing the imposition of interest and penalties in such cases. The Tribunal's decision was based on the specific facts of the case and the legal precedents cited during the proceedings.