2010 (2) TMI 432 - AT - Central Excise

Cenvat Credit - The Appellants have contended that they have taken the credit, but not utilized the same. The Appellants have also contended that they have reversed the irregular credit. It was also contended that no interest and penalty imposed in the light of the decision of Commissioner v. Maruti Udyog. Revues submission that case relates to rule 12 of Cenvat Credit Rule 2002 and not to Rule 14. Held that both rule provide for recovery of Cenvat Credit taken or utilized wrongly. Commissioner in his findings referred to the impugned credit as taken/utilized . He has not given clear cut finding in the impugned order whether the credit was only taken or utilized also. Now the appellant have also contented that their credit balance has throughout been more than the amount of credit involved in the case. Therefore the matter requires reconsideration. In these circumstances the impugned order is set and aside and the matter is remanded to the Commissioner to decide afresh.

Summary

Issues:
Challenge to Commissioner's Order for recovery of interest and penalty for wrongly taken CENVAT Credit.

Analysis:
The appellants, engaged in carbon black manufacturing, distributed Service Tax credit to their Durgapur plant through invoices in 2007. They later realized the error and reversed the CENVAT Credit in 2008. A show cause notice was issued, leading to the demand of CENVAT Credit amount, interest, and penalty by the Commissioner. The appellants argued that they only took the credit and did not utilize it, citing legal precedents supporting their stance. The Department contended that interest is payable for irregular credit taken or utilized, differing from the appellants' argument based on older legal interpretations.

The Tribunal examined the submissions and records, referencing a decision by the Hon'ble Punjab & Haryana High Court that an assessee is not liable to pay interest on credit taken but not utilized, a stance upheld by the Hon'ble Supreme Court. The Tribunal noted that this decision has been followed in various cases concerning Cenvat Credit Rules. It also addressed the Department's argument regarding the relevance of the legal precedent, emphasizing that rules provide for the recovery of wrongly taken or utilized credit. The Tribunal highlighted the lack of clarity in the Commissioner's order regarding whether the credit was only taken or utilized, necessitating reconsideration. Consequently, the Tribunal set aside the order and remanded the matter to the Commissioner for a fresh decision after considering all aspects and providing the appellants with an opportunity to be heard.

In conclusion, the appeal was allowed by way of remand, emphasizing the need for a thorough reconsideration of the case by the Commissioner to determine the appropriate course of action regarding the wrongly taken CENVAT Credit, interest, and penalty.