2019 (5) TMI 1179 - AT - Central Excise

CENVAT Credit - payment of duty through CENVAT Account - appellants contended that they had a credit on the goods lying in stock as on 01.06.2006 and they are eligible to pay the applicable duty through CENVAT also. Therefore, they have ended up paying more interest - HELD THAT - The appellants have submitted that they have paid interest of ₹ 74,61,293/- and are entitled for refund of ₹ 62,36,018/- as there was huge stock of materials lying in stock as on 01.06.2006 the credit on which is available to them therefore the duty paid by them in cash should only be reckoned for the purpose of calculating interest as this is the duty which is actually not paid. The interest is payable on the differential amount only. However, in this case, the availability of credit is in dispute and this Bench has directed the lower authorities to allow credit after verifying the record, available with the appellants or the Department, pertaining to receipt (imports), storage and distribution of parts to various service centres within three months of receipt of the order. In view of the Miscellaneous Order, we find that the claim of interest by the appellant is pre-mature. The amount of credit available to the appellant needs to be arrived at by the authorities and thereafter, the net amount payable as on the date of payment of the duty by the appellants i.e. 04.05.2007 requires to be arrived at - the differential amount alone shall be reckoned for the purpose of payment of interest - Appeal allowed by way of remand.

Summary

Issues:
1. Whether interest is payable on the entire duty paid or only on the differential duty paid in cash over and above the available credit.
2. Whether the availability of CENVAT credit to the appellants affects the calculation of interest payable.

Analysis:

Issue 1:
The appellants contended that they are eligible to pay the applicable duty through CENVAT and claimed a refund of the excess interest paid. The Counsel for the appellants argued that interest should be payable only on the differential duty paid in cash over and above the available credit, citing relevant case laws. The Authorized Representative, however, maintained that the availability of CENVAT credit is in dispute and the interest claimed by the appellants is premature. After hearing both parties and examining the submissions and records, the Tribunal found that interest should be calculated on the differential amount only, considering the duty actually not paid. The Tribunal referred to a High Court case to support this conclusion.

Issue 2:
The availability of CENVAT credit to the appellants was a crucial point of contention. The Tribunal had previously remanded the case for re-quantification of the CENVAT credit. The Authorized Representative argued that since the availability of CENVAT credit was in question, the appellant's contention regarding interest calculation based on net CENVAT credit amount could not be entertained. The Tribunal, in light of the previous order and the pending verification of credit availability, decided that the claim of interest by the appellant was premature. It was held that the differential amount alone should be considered for the calculation of interest.

In conclusion, the Tribunal allowed the appeal by remanding the case to the jurisdictional authorities for further verification and calculation based on the differential amount. The decision was pronounced in open court on a specified date.