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2023 (4) TMI 663 - AT - Service TaxLiability of Interest on CENVAT Credit wrongly taken (credit availed but not utilised) - appellant had taken 100% credit on capital goods in the year 2009-10 itself - As per department since appellant have erroneously taken 50% cenvat credit of Rs. 23,47,192/- in the year 2009-10 instead of taking in the year, 2010-11, the appellant was liable for payment of interest on such cenvat credit wrongly taken - Rule 14 of Cenvat Credit Rules 2004 - penalty - HELD THAT - Rule 14 has been interpreted by the Hon ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. 2011 (2) TMI 6 - SUPREME COURT - Hon ble Supreme Court in the case of Union of India v. Ind-Swift Laboratories Ltd., has interpreted the unamended Rule 14 which was applicable to the appellant during the financial years in question and, has categorically held that a bare reading of such rule would clearly indicate that the manufacturer or the provider of the output service becomes liable to pay interest, along with the dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded. The Hon ble Supreme Court, accordingly, held that if the said Rule 14 is read as a whole, the Hon ble Supreme Court did not find any reason to read the word or in between the expressions taken or utilized wrongly or has been erroneously refunded as the word and . Another issue raised by the Appellant is that subsequent amendment brought to Rule 14 of Cenvat Credit Rules, 2004, the expression taken or utilized wrongly has been substituted with taken and utilized wrongly be read as clarificatory in nature and hence retrospective in application - this issue has also been considered by the Mumbai Bench of this Tribunal in M/S BALMER LAWRIE CO LTD VERSUS CCE BELAPUR 2014 (2) TMI 545 - CESTAT MUMBAI where it was held that This amendment rule makes it absolute clear that the amendment is with effect from 17-3-2012 and not before. In view of the express provisions in the Amendment Rules, the argument of the appellant that amendment being in the nature of substitution would have retrospective effect cannot be accepted. It is a trite law that every statutory provision is prospective only unless it is explicitly provided that it is retrospective in nature and the legislature provides for such retrospective operation. In the present case, no such retrospectivity has been provided by the legislature in respect of Notification 18/2012-C.E. (N.T.), dated 17-3-2012 and, therefore, the argument of the Counsel in this regard and the decisions relied upon in support of the same cannot be accepted . There are no merit in the contentions raised in the appeal that mere availment of Cenvat credit without its utilisation of the same will not attract interest at appropriate rate under Rule 14 of Cenvat Credit Rules, 2004 as was in force during the relevant time. Penalty - HELD THAT - Ld. Commissioner after considering all the facts rightly extended the benefits of waiver of penalty to the appellant - the said waiver of the penalty shall be subject to payment of interest of Rs 84,460/- by the Appellant within 30 days of receipts of this order. Appeal allowed in part.
Issues involved:
The appeal against the Order-in-Appeal passed by the Commissioner (Appeals) of Central Excise, Ahmedabad regarding the recovery of interest on erroneously taken Cenvat credit and imposition of penalty under Cenvat Credit Rules, 2004. Recovery of Interest on Erroneously Taken Cenvat Credit: The appellant, a registered entity availing Cenvat Credit on input services and Capital Goods, had taken 100% credit on capital goods in the year 2009-10 instead of the eligible 50%. A Show Cause Notice was issued for recovery of interest amounting to Rs. 84,460/- and penalty under Rule 15 of Cenvat Credit Rules 2004. The Adjudicating authority dropped the demand of interest as the appellant did not utilize the erroneously taken credit. The Commissioner (Appeals) set aside the order-in-original and held the appellant liable for interest on the wrongly taken Cenvat credit. The appellant contended that they are not liable for interest as the amount was not utilized. However, the Tribunal referred to the interpretation of Rule 14 by the Supreme Court in a previous case and held that interest is recoverable even if the credit was not utilized. The Tribunal rejected the argument that subsequent amendments to Rule 14 had retrospective effect, emphasizing that the amendment was not retrospective. Imposition of Penalty: The Tribunal found that the Commissioner rightly extended the benefit of waiver of penalty to the appellant. However, the waiver of penalty was subject to the condition that the appellant pays the interest of Rs. 84,460/- within 30 days of receiving the order. The appeal was partially allowed in favor of the appellant.
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