2024 (5) TMI 759 - HC - Central Excise

Charge of Interest under Rule 57AH of Central Excise Rules 1944 (now Rule 12 of the Central Excise Rules, 2002) on the credit wrongly taken - HELD THAT - This Court in case of Commissioner of Central Excise vs. Gupta Steel 2006 (4) TMI 158 - HIGH COURT OF GUJARAT AT AHMEDABAD while dealing with a similar question has held that ' charging of interest on the amount of credit lying unutilized is not correct in law. We, therefore hold that the applicants are not liable to pay interest on the Amount of credit, which was lying unutilized and which has been ordered to be reversed'. Thus, no question of law much-less any substantial question of law arises from the order of the Tribunal as the issue is squarely covered in favour of respondent assessee in case of Gupta Steel. Appeal dismissed.

Summary

Issues involved:
The issue involved in this case is whether interest is chargeable under Rule 57AH of Central Excise Rules 1944 (now Rule 12 of the Central Excise Rules, 2002) on the credit wrongly taken.

Judgment Summary:

Issue 1: Interest chargeability on wrongly taken credit:
The appeal was filed under section 35G of the Central Excise Act, 1944, challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The substantial question of law admitted by the Court was whether interest is chargeable under Rule 57AH of Central Excise Rules 1944 on the credit wrongly taken. The Court observed that the issue was similar to a previous case but admitted the appeal due to a pending Special Leave Petition (SLP) before the Supreme Court.

Issue 2: Admissibility of modvat credit and interest on unutilized credit:
The Tribunal held that fuel oil and food staff on board ship are not inputs required directly or indirectly for the manufacture of scrap emerging from ship breaking. Consequently, modvat credit was not admissible to the appellant, and charging interest on unutilized credit was deemed unsustainable. The Court referred to a similar case where interest on unutilized cenvat credit was contested, and it was held that interest on credit lying unutilized is not correct in law. As no infirmity was found in the Tribunal's order, the Court dismissed the appeal, stating that the issue was already settled in favor of the respondent assessee in a previous case.

Conclusion:
The Court concluded that no question of law, let alone a substantial question of law, arose from the Tribunal's order as the issue was already decided in a previous case. Therefore, the appeal was dismissed accordingly.