2018 (11) TMI 157 - AT - Central Excise

Demand of Interest - CENVAT Credit availed wrongly but reversed subsequently without actually utilizing the same - Held that - In the peculiar facts of this case as to the availability of credit balance as on September, 2011 and the non-utilization as pleaded by the Ld. Advocate vis- -vis the tabular statement filed in the Appeal Memo, the same requires factual verification by the adjudicating authority and hence, the impugned Order set aside and case remanded back to the file of the adjudicating authority to ascertain these factual aspects - appeal allowed by way of remand.

Summary

Issues: Challenge to demand for interest on waste scrap clearance, availability of CENVAT credit balance, remand for factual verification.

Analysis:
1. Challenge to Demand for Interest: The appellant challenged the demand for interest on waste scrap clearance, which was proposed in a Show Cause Notice issued in 2013. The Order-in-Original confirmed the demand, including interest and penalty. The first appellate authority provided partial relief, and upon further appeal, the Tribunal remanded the matter back to the lower authority with directions. The adjudicating authority in the remand order dropped the duty demand but confirmed the interest demand. The appellant then appealed against the interest demand before the first appellate authority, leading to the current appeal.

2. Availability of CENVAT Credit Balance: During the hearing, the appellant's advocate pointed out that they had sufficient credit balance in their CENVAT Credit books until September 2011, against the total duty demanded. The advocate argued that interest should not have been levied as the credit was not utilized from April 2008 to September 2011. The appellant had reversed the credit but had not utilized it due to unforeseen circumstances like the Thane Cyclone in 2011, which damaged their unit and essential documents. The appellant provided a table showing the availability of CENVAT balance from April 2008 to August 2016, emphasizing the balance in September 2011 was substantial.

3. Remand for Factual Verification: The advocate's submissions regarding the availability and non-utilization of the CENVAT credit balance were contested by the revenue authority, stating that these facts were not previously available for verification. The Tribunal, after considering the contentions and documents, noted previous decisions where wrongly availed CENVAT credit reversed without utilization did not attract penalty. However, due to the specific facts of this case, including the availability of credit balance and non-utilization until September 2011, the Tribunal set aside the impugned order and remanded the case for factual verification by the adjudicating authority. The Tribunal directed that if the appellant's claim regarding the unutilized CENVAT credit balance is found to be correct, no interest should be charged by the adjudicating authority.

In conclusion, the Tribunal allowed the appeal for statistical purposes by way of remand, emphasizing the need for factual verification regarding the availability and non-utilization of the CENVAT credit balance to determine the validity of the interest demand.