2025 (1) TMI 308 - AT - Service Tax

Liability to pay interest on the Cenvat Credit wrongly availed in terms of Rule 14 of Cenvat credit Rules, 2004 read with Section 75 of the Finance Act, 1994 - HELD THAT - This appeal is involving limited issue of demand of interest amounting to Rs. 7,43,063/- on the ground that the appellant have wrongly availed the credit. It is found that since the appellant have not utilised the credit and kept in separate account and not in the Cenvat account the same will not amount to wrong availment of credit unless or until the same is transferred to the Cenvat account and utilized the same. Therefore in this fact till the appellant have utilized the amount for payment of service tax neither it is a case of availment of credit nor any interest liability arise. Accordingly, in the facts of the present case the appellant is not liable to pay any interest hence the demand of interest is set aside. Conclusion - The appellant is not liable to pay any interest. Appeal allowed.

Summary

In the case before the Appellate Tribunal CESTAT Ahmedabad, the primary issue was whether the appellant was liable to pay interest on allegedly wrongly availed Cenvat Credit under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 75 of the Finance Act, 1994. The appellant contended that they had not availed the credit, as they maintained a separate register for monitoring Cenvat Credit, and only transferred amounts to their Cenvat Credit account when tax liabilities arose. They argued that since the credit remained unutilized, the interest demand was unsustainable.

The Tribunal, comprising Mr. Ramesh Nair and Mr. C. L. Mahar, found that the appellant did not utilize the credit and maintained it in a separate account, which did not constitute wrongful availment. The Tribunal concluded that "neither it is a case of availment of credit nor any interest liability arise" until the credit is transferred to the Cenvat account and utilized. Consequently, the demand for interest was set aside, and the appeal was allowed. The decision was pronounced in open court on December 10, 2024.