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2024 (5) TMI 366 - AT - Central ExciseLevy of interest on irregular/excess Cenvat Credit availed but not utilised - invocation of extended period of limitation - levy of equal penalty - HELD THAT - The issue of leviability of interest on irregularly availed Cenvat Credit is no more res integra in view of the Hon ble High Court of Karnataka s decision 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 , wherein it was held ' Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.' The invocation of extended period on irregularly availed Cenvat Credit and excess credit is settled in view of this Tribunal s decision in the Appellants own case 2023 (11) TMI 467 - CESTAT CHENNAI in Final Order No. 41026/2023 dated 09.11.2023 wherein this Tribunal held that ' the appellant though have taken credit irregularly or wrongly in the books it was never utilized. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed CENVAT Credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking extended period is not justified in this appeal.' It is found that the appellant though have taken credit merely in the books, it was never utilised. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed Cenvat credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking the extended period is not justified in this appeal. Thus, interest is not leviable on the irregular availment of credit and excess credit and also that extended period of limitation is not invokable - the impugned order is set aside - appeal allowed.
Issues Involved:
1. Whether interest is leviable on irregular/excess Cenvat Credit availed but not utilized? 2. Whether extended period is invokable and imposition of equal penalty sustainable? Summary: 1. Interest on Irregular/Excess Cenvat Credit: The Tribunal examined whether interest is leviable on irregularly availed but not utilized Cenvat Credit. The appellant argued that due to maintaining a huge balance of Cenvat credit, the demand for interest would not sustain. The Tribunal referred to the Karnataka High Court's decision in Bill Forge Pvt. Ltd., which held that interest is compensatory and payable only when duty is not paid on the due date. If the credit is reversed before utilization, no interest is due. The Tribunal also cited Lakshmi Machine Works Ltd. and Strategic Engineering Pvt. Ltd., which supported the view that mere availment without utilization does not attract interest. Thus, the Tribunal concluded that interest is not leviable on the irregular availment of credit. 2. Extended Period and Penalty: The Tribunal assessed whether the extended period for recovery and imposition of penalty was justified. The appellant contended that there was no malafide intention as the credit was reversed upon audit's pointing out. The Tribunal referred to its own decision in the appellant's case, which held that if credit is reversed before utilization, invoking the extended period is not justified. The Tribunal also noted that the facts in the present case differ from the Sree Rayalseema Hi-Strength Hypo Ltd. case, where the extended period was invoked due to ineligible credit on welding electrodes. As such, the Tribunal found no justification for attributing any motive to evade tax and held that the extended period is not invokable. Conclusion: The Tribunal set aside the impugned order and restored the original order, ruling that interest is not leviable on the irregular availment of credit and the extended period of limitation is not invokable. The appeal was allowed with consequential relief as per the law. (Order pronounced in open court on 07.05.2024)
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