2019 (5) TMI 509 - HC - Central Excise

Demand of interest - irregularly availed CENVAT Credit, but not utilized - HELD THAT - The substantial question of law in both the Appeals are answered in the affirmative i.e. in favour of the Respondent-Revenue and against the Appellant-Assessee.

Summary

Issues:
Appeals challenging orders passed by the Customs, Excise and Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944 regarding the levy of interest on wrongly taken credit without utilization.

Analysis:
The Appeals were filed to challenge the Tribunal's orders on the issue of whether non-utilization of wrongly taken credit would lead to a waiver of interest under the Central Excise Act, 1944. The Tribunal relied on the decision of the Supreme Court in a previous case and held that interest would be payable from the date of irregular taking of the credit, regardless of its utilization. However, a subsequent decision of the High Court introduced ambiguity, leading to the need for further consideration.

After admission of the Appeals, a decision by the High Court in another case favored the Revenue, emphasizing that interest would be payable from the date of irregular credit taking as per Rule 14 of the Cenvat Credit Rules, 2004, irrespective of utilization. This prompted the Appeals to be put on board for final disposal, with the issue seemingly concluded in favor of the Revenue based on the recent decision by the High Court.

The Counsel for the Revenue acknowledged that the issue was likely to be decided against the Appellant based on previous judgments. However, she argued for the Appeals to be kept pending due to a similar issue being considered by the Supreme Court in an appeal from the Chhattisgarh High Court. The Counsel cited legal precedents to support the contention that once an appeal is admitted by the Supreme Court, the lower court's judgment is in jeopardy until the Supreme Court decides on the matter.

The High Court noted that a previous decision by a Coordinate Bench favored the Revenue, and there was no reason to deviate from that ruling. The Court emphasized that the decision of the Coordinate Bench would bind them, and there was no justification to refer the matter to a Larger Bench. Additionally, the Court clarified that the decision of the Chhattisgarh High Court was the one in jeopardy due to the pending appeal before the Supreme Court, not the decision of the Coordinate Bench.

Based on the precedent set by the Coordinate Bench, the High Court answered the substantial question of law in favor of the Revenue and against the Appellant, leading to the dismissal of both Appeals in line with the previous judgment.

In conclusion, the High Court's decision was guided by legal precedents and the binding nature of previous rulings, ultimately resulting in the dismissal of the Appeals challenging the levy of interest on wrongly taken credit under the Central Excise Act, 1944.