2009 (5) TMI 425 - AT - Central Excise

Interest-Cenvat credit- The issue involved in this case is regarding the irregular availment of Cenvat credit by the assessees in the repair and conditioning works. The assessee availed Cenvat credit on many items. These items are used in the manufacturing of the final product. These items are also used by the assessee for repairing the machinery supplied to their customers. After using the inputs for repairing machinery the said repaired machines are removed without payment of duty. Hence it was the contention of the revenue that the assessee is required to reverse the Cenvat credit availed on such inputs used in such repair of machinery. The assessees had reversed the entire amount of Cenvat credit as directed by the lower authorities. The issue involved in this case is whether the assessee is required to pay the interest in respect of the Cenvat credit availed by them prior to 14-5-2001. Held that- for ineligible Cenvat credit availed by the appellant on the inputs prior to 11.5.2001 and used for repairing and reconditioning of machinery the question of payment of interest does not arise. As regards the period post 11.5.2001 the assessee is required to pay the interest such amount which has been reversed accordingly allow the appeal partly.

Summary

The Appellate Tribunal CESTAT, Bangalore, consisting of S/Shri T.K. Jayaraman and M.V. Ravindran, heard an appeal (No. 654/05) against Order-in-Appeal No. 122/05 C.E. The tribunal found that duty had already been paid before the issue of the show cause notice, so penalty and interest were not leviable. The appellants were eligible for a refund. The revenue appealed to the Hon'ble High Court, which partially accepted the appeal, remitting the matter back to the tribunal to consider interest for the delayed period. The tribunal reconvened to decide if the assessee was liable for interest for late payment. The issue at hand was the irregular availment of Cenvat credit by the assessee for repair and conditioning works. The tribunal found that for ineligible Cenvat credit availed by the appellant on inputs before 11-5-2001, interest was not required. For the period post 11-5-2001, the assessee was required to pay interest on the reversed amount. The appeal was allowed in part. The order was pronounced in open court, concluding the hearing.