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TMI Blog2017 (4) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... armada Fertilizers Company Limited [2012 (4) TMI 309 - GUJARAT HIGH COURT] - appeals are remanded to the adjudicating authority for the limited purpose of verification of the fact whether extended period of limitation for recovery of interest is applicable or otherwise - appeal allowed by way of remand. - E/441/2011, E/11633/2013, E/12000/2013, E/12265/2013, E/12263/2013, E/12924/2013, E/13047/2013, E/13149/2013, E/13305/2013, E/13452/2013, E/13981/2013, E/11048/2014 - 10685-10696/2017 - Dated:- 31-3-2017 - Dr. D.M. Misra, Member (Judicial) Shri Rakesh M. Shah, Senior Manager, Ms. Dimple Gohil, S/Shri Willingdon Christian, P.V. Sheth, Jigar Shah, Advocates and Shri Dhaval K. Shah, Advocates for the appellants/assessee Shri N. Nagori, A.R. for the Revenue Essar Oil Limited Versus C.C.E. Cus, Ahmedabad I Balaji Filaments Limited Versus C.C.E. S.T., Vapi Hindalco Industries Limited Versus C.C.E. S.Tax, Vadodara II Birla Cellulosic Versus C.C.E. S.Tax, Surat II Amoli Organic Pvt. Limited Versus C.C.E. S.Tax, Vadodara II Superfine Syntex Limited. Versus C.C.E. S.Tax, Surat I D.K. Polymers Versus C.C.E. S.Tax Vapi G.P.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 (Tri-Larger Bench) observed that the judgment of the jurisdictional High Court is binding on the Tribunal and accordingly, held that the Bangalore Bench of the Tribunal should follow the judgment of the Hon ble Karnataka High Court in Bill Forge Pvt. Ltd s case. It is his contention that levy of interest on the credit availed has been considered by the Hon ble Gujarat High Court in the case of C.C.E., Vadodara II vs. Dynaflex Pvt. Ltd. 2012 (25) STR 277 (Guj.). The Hon ble Gujarat High Court following the ratio laid down by the Apex Court in the case of C.C.E., Mumbai I vs. Bombay Dyeing and Mfg. Co. Ltd. -2007 (215) ELT 3 (SC) observed that when the credit entry has been reversed before its utilization, the same amounts to not taking of the credit. Applying the said principle, therefore, demanding interest under Rule 14 of CENVAT Credit Rules,2004 in the present case also, is bad in law. He has further submitted that Rule 14 of Cenvat Credit Rules, has been amended with effect from 17.3.2012 whereby the expression taken or utilized has been substituted with the expression taken and utilized wrongly . It is his contention that the said amendment since made the position of law cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the judgment delivered by the Hon ble Karnataka High Court is binding on the Bangalore Bench being the jurisdictional High Court. It is his contention that since there is no judgment from the jurisdictional High Court on the very same issue, hence the judgments delivered by the Bombay High Court, Chhattisgarh High Court and Madras High Court following the ratio of the Hon ble Apex Court in the Ind- Swit Laboratories Ltd. s case ought to be followed by this Tribunal. He has submitted that the Division Bench of this Tribunal in Gujarat Guardian Ltd s case distinguishing the ratio laid down by the Hon ble Gujrat High Court in Dynaflex Pvt. Ltd. s observed that it was delivered in a different context, but in the case on hand, there is a specific judgment of the Hon ble Supreme Court on the issue,hence the ratio laid down by the Apex Court in Indo Swift Laboratories Limited s case is accordingly applicable. He submits that the Division Bench which decided the Garden Silk Mills Limited Hindalco Ltd. s case has not taken note of the earlier judgment of the same Bench in Gujarat Guardian Ltd s case and also the judgments of various other High Courts, hence cannot be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. 9. The aforesaid Rule has been interpreted by the Hon ble Supreme Court in the case Indo Swift Laboratories Ltd.(supra). While examining the issue whether interest would be leviable on credit availed wrongly but not utilized, reversing the opinion of the High Court that or should be read as and in the expression taken or utilized , their Lordship observed as follows: 16. A bare reading of the said Rule would indicate that the manufacturer or the provider of the output service becomes liable to pay interest along with the duty where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded and that in the case of the aforesaid nature the provision of Section 11AB would apply for effecting such recovery. 17. We have very carefully read the impugned judgment and order of the High Court. The High Court proceeded by reading it down to mean that where CENVAT credit has been taken and utilized wrongly, interest should be payable from the date the CENVAT credit has been utilized wrongly for according to the High Court interest cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption notification, the time of reversal was not the material and reversal of the credit would amount to no credit being taken. In these decisions, Rule 14 or Section 11AB was not the subject matter for consideration. Therefore, these decisions relied upon by the learned counsel for the assessee are clearly distinguishable by facts, while read in the context of the facts and relevant notification which are applicable to the facts of the case. 11. The Hon ble Bombay High Court also in the case of GL V India Pvt. Ltd. (supra) referring to the ratio of the Hon ble Supreme Courts decision in Indo Swift Laboratories Ltd. s case observed as follows: 16. In so far as the judgment passed by the Madras High Court is concerned, the Madras High Court has taken a view that mere taking of Cenvat credit facility is not at all sufficient for compelling the assessee to pay interest as well as penalty. With great respect to the Hon ble Judges of the Madras High Court, we may say that this is not what has been held by their Lordships of the Apex Court. The Apex Court has in clear terms held that the interpretation as paced by the Punjab and Haryana Court for invoking the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding as follows: 5. So far as charging of interest upon wrongly taken Cenvat credit is concerned, it has been argued by the appellant that in view of various judgments, relied upon in para 2 above, no interest is payable when the credit taken is not utilized and reversed subsequently. It is the case of the appellant that as per the ratio laid down by the Apex Court and the jurisdictional High Court of Gujarat when a Cenvat credit taken is reversed by an assessee than it amounts to not taking Cenvat credit at all and accordingly no interest is payable. In this regard, it is seen that the law laid down by the Hon ble Supreme Court and High Courts relied upon by the appellant were with respect to admissibility of an exemption Notification when there was a condition for availing exemption that Cenvat credit with respect to certain inputs should not be taken by an assessee. It was in that context that Hon ble Supreme Court and jurisdictional High Courts gave the rulings that reversal of Cenvat credit will amount to not taking Cenvat credit and accordingly benefit of relevant exemption notifications was held to be available to such assessees who reverse Cenvat credit earlier taken. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective only unless it is explicitly provided that it is retrospective in nature and the legislature provides for such retrospective operation. In the present case, no such retrospectivity has been provided by the legislature in respect of Notification 18/2012-C.E. (N.T.), dated 17-3-2012 and, therefore, the argument of the Counsel in this regard and the decisions relied upon in support of the same cannot be accepted. 17. In these circumstances, I do not find merit in the contentions raised in the respective appeals that mere availment of CENVAT credit without its utilisation of the same will not attract interest at appropriate rate under Rule 14 of Cenvat Credit Rules, 2004 as was in force during the relevant time. However, as far as recovery of interest is concerned for invoking extended period of limitation, the principle laid down in this regard including the judgment of Hon ble High Court in the case of Hindustan Insecticides Ltd. vs. C.C.E., LTU 2013 (297) ELT 332 (Del.) will be applicable. After analyzing relevant provisions, it has been observed by their Lordships at Para 14 of the said Judgment as follows: 14. A reading of the aforesaid paragraph would show that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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