9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 1102 - AT - Central ExciseRefund of interest - appellant only availed the Cenvat Credit in their books and not utilized the credit at all - whether the appellant is liable to pay interest for the mistakenly/irregularly availing Cenvat credit which they did not utilize? - HELD THAT - The Hon ble Karnataka High in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT after considering the Hon ble Supreme Court s decision in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. 2011 (2) TMI 6 - SUPREME COURT held that if the wrongly availed credit does not stand utilised by the assessee and is reversed before utilisation, no interest liability would arise against them. A larger Bench of the Tribunal in the matter of J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE 2016 (11) TMI 911 - CESTAT BANGALORE has held that since the appellant therein had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise. It is not disputed that the irregularly availed Cenvat Credit was reversed by the appellants immediately upon being pointed out by the audit that too with interest and therefore no show cause notice was issued for that purpose. The said credit was not utilized by the appellant for payment of excise duty etc. It is merely a book entry and therefore the credit wrongly availed does not amount to short payment of duty - The credit having been taken inadvertently stands reversed by the Appellant even before utilisation, no interest liability would arise inasmuch as there is no loss to the Revenue and the credit remained as a paper entry in their books of accounts. Since there was no loss of revenue to the government exchequer, therefore the question of compensating the revenue by way of interest does not arise. In the facts of the present case, Revenue cannot impose liability to pay interest on the assessee invoking the provisions of Rule 14 of Cenvat Credit Rules, 2004 - Appeal allowed - decided in favor of appellant.
Issues:
1. Appellant assailing impugned order dated 28.03.2013 passed by Commissioner of Central Excise. 2. Availment of CENVAT Credit on capital goods exceeding 50% of duty paid. 3. Reversal of CENVAT Credit under protest after audit pointed out excess credit. 4. Application for refund of interest amount paid upon realization of non-utilization of credit. 5. Show cause notice proposing rejection of refund claim. 6. Dismissal of appeal by Commissioner (Appeal) on grounds of limitation. 7. Appellant's argument of availing credit under bona fide belief and non-utilization of credit. 8. Interpretation of Rule 14 of Cenvat Credit Rules, 2004 regarding interest payment on wrongly availed credit. 9. Comparison of decisions by Supreme Court and High Court regarding interest liability. 10. Applicability of Section 11A(2B) of Central Excise Act, 1944 on interest refund. 11. Tribunal's consideration of previous judgments in similar cases. 12. Liability of interest payment when credit is not utilized for duty payment. 13. Compensation nature of interest payment and loss to government exchequer. 14. Tribunal's decision on appellant's liability to pay interest on belated reversal of Cenvat credit. Analysis: The appeal before the Appellate Tribunal CESTAT Mumbai involved the challenge against an order passed by the Commissioner of Central Excise regarding the availing of CENVAT Credit on capital goods exceeding the permissible limit of 50% of duty paid. The appellant had reversed the excess credit under protest after an audit pointed out the irregularity. Subsequently, upon realizing that the credit was not utilized, the appellant applied for a refund of the interest amount paid. The Commissioner (Appeal) dismissed the appeal on the grounds of limitation, leading to the filing of an appeal before the Tribunal. The main issue revolved around the interpretation of Rule 14 of Cenvat Credit Rules, 2004, concerning the liability to pay interest on wrongly availed credit. The appellant argued that the credit was taken under a bona fide belief and not utilized, thus warranting a refund of interest. The Tribunal considered various judicial precedents, including decisions by the Supreme Court and High Courts, to determine the applicability of interest liability in such cases. The appellant contended that Section 11A(2B) of the Central Excise Act, 1944, did not apply as there was no short payment of duty due to the non-utilization of credit. The Tribunal analyzed previous judgments on similar issues and concluded that the interest liability arises when the credit is utilized for duty payment, resulting in loss to the government exchequer. Since the irregularly availed credit was promptly reversed by the appellant without utilization, no interest liability was deemed to exist. The Tribunal emphasized that the purpose of interest recovery is to compensate for delayed revenue receipt, which did not occur in this case. Therefore, the Tribunal held that the appellant was not liable to pay interest on the belated reversal of Cenvat credit, allowing the appeal with consequential relief as per law.
|
