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2014 (4) TMI 574 - AT - Central ExciseDemand of Interest on cenvat credit wrongly taken but reversed before utilization - Held that - interest would be payable from the date Cenvat credit is taken or utilized wrongly - assessee had not taken or utilized the Credit but only availed wrong credit in their account books and on pointing out the mistake, immediately reversed the entry. As no benefit of wrong entry in account books was taken, interest is not payable - Decision in the case of Commissioner of Central Excise and S.T., Bangalore v. Bill Forge Pvt. Ltd. - 2011 (4) TMI 969 - KARNATAKA HIGH COURT and Commissioner of Central Excise, Bangalore v. Pearl Insulation Ltd. 2012 (11) TMI 912 - KARNATAKA HIGH COURT followed - Inasmuch as issue stands decided, by Karnataka High Court by interpreting Supreme Court decision in Ind-Swift 2011 (2) TMI 6 - Supreme Court and the facts are not in dispute - Decided against Revenue.
Issues:
Disallowance of Cenvat credit for input services used in another unit, imposition of penalty under Cenvat Credit Rules, 2002, and interest payable on inadmissible credit. Analysis: The case involved the disallowance of Cenvat credit amounting to Rs. 84,716/- for input services not used in the factory where the credit was availed. The Original Adjudicating Authority confirmed the disallowance, interest payable, and imposed a penalty under Rule 15 of Cenvat Credit Rules, 2002. The Commissioner (Appeals) allowed the appeal, noting that the appellant had reversed the credit upon realization that it was inadmissible. The Commissioner relied on legal precedents, including a Supreme Court decision and a High Court decision, to support the view that if Cenvat credit is reversed before utilization, it would mean that credit has not been taken. The Commissioner concluded that since the credit was not utilized and was reversed promptly, there was no liability for interest or penalty. The Revenue filed an appeal challenging the Commissioner's order, seeking to impose a penalty and confirm interest on the wrongly availed Cenvat credit. The Revenue argued that a decision by the Hon'ble Punjab & Haryana High Court, which was relied upon by the Commissioner, had been reversed by the Hon'ble Supreme Court. The Revenue contended that interest should be payable from the date of the wrong availment of credit. However, the respondent cited a recent decision of the Hon'ble High Court of Karnataka, which interpreted the Supreme Court decision differently. The Karnataka High Court held that interest would be payable only from the date the Cenvat credit was taken or utilized wrongly. As the facts were undisputed, and the Karnataka High Court's interpretation of the Supreme Court decision was followed consistently, the Tribunal rejected the Revenue's appeal. In the final judgment pronounced on 10-1-2013, the Tribunal upheld the Commissioner's decision, emphasizing that as the issue had been settled by the Karnataka High Court's interpretation of the Supreme Court decision, and considering the undisputed facts of the case, there were no merits in the Revenue's appeal. The Tribunal rejected the Revenue's appeal, affirming the Commissioner's order in favor of the respondent.
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