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TMI Blog2016 (11) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... unutilized Cenvat Credit - appeal allowed. Appeal allowed in part and part matter on remand. - E/454 & 465/10 - FO/A/76472-76473/2016 - Dated:- 30-11-2016 - Shri P.K. Choudhary, Member(Judicial) Commissioner of Central Excise, Siliguri, M/s. Blossom Polymers (P) Ltd. Shri S.P. Majumder, Advocate for the Party Shri S.S. Chattopadhyay, Supdt.(AR) for the Revenue ORDER Per: Shri P.K. Choudhary. Appeal No.E/454/10 (Assessee s Appeal) M/s.Blossom Polymers (P) Ltd., the appellants herein are engaged in the manufacture of Plastic Moulded Furniture falling under chapter 49 of CETA, 1985 in their factory at Subhasganj Road, Post Office: Burduary, District: Uttar Dinajpur, West Bengal. The appellants are availing Cenvat Credit of duty paid on various inputs as well as capital goods. 2. Briefly stated the facts of the case are that the appellant availed Cenvat Credit of ₹ 1,23,229/-(C.V. Duty) and ₹ 2,465/-(Education Cess) on the strength of Bill of Entry No.873513 dated 24.05.2005. The appellants produced photocopy of the duplicate copy of Bill of Entry and could not produce original of duplicate copy of Bill of Entry. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No.E/465/10 (Revenue s Appeal) 4. Revenue is in Appeal against the same Order-in-Appeal in respect of availment of credit of Basic Customs Duty of ₹ 5,33,930.40 and Education Cess thereon of ₹ 24,039.70 on imported capital goods during the period from 31.03.2005 to 24.08.2005. on 25.07.2007, the Central Excise officers of their division office visited the appellant s factory and pointed out the mistake. The respondents reversed the amount immediately on 25.07.2007 by debiting the RG-23C part-II and this fact was intimated vide letter dated 10.08.2007. 5. A Show Cause cum Demand Notice was issued on 08.02.2008 and vide order-in-original dated 19.03.2009 the Adjudicating authority imposed the penalty of ₹ 5,57,970.10 i.e. equal to the amount of the credit wrongly taken (and also reversed) under rule 15(2) of Cenvat Credit Rules, 2004. It is the case of the respondent assessee that they had commenced commercial production from their newly set up factory in the month of May, 2006 and due to lack of proper knowledge about the central excise law and procedures and also being a new entity having no expertise they took Cenvat credit of Basic Customs Duty and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Order of the Hon ble CESTAT, when Revenue preferred appeal, the substantial question of law was answered against the Revenue and in favour of the assessee by the Hon ble Karnataka High Court, by placing reliance on various judgments of Hon ble Apex Court rendered in the context of the Modvat Scheme. After discussing the judgment of Hon ble Apex Court in case of Ind-Swift Laboratories Ltd. (Supra) the Hon ble Karnataka High Court observed inter alia, as follows. 19 Rule 14 of the CENVAT Credit Rules, 2004 reads as under:- Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded. When the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacture or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, Shall apply mutatis mutandis for effecting such recoveries. A reading of the aforesaid provisions makes it very clear that the said provision is attracted where the Cenvat Credit has been taken or utilized wrongly or has been erroneously refunded. In view of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en or utilized wrongly. 22. In the instant case, the facts are not in dispute. The assessee had availed wrongly the Cenvat credit on capital goods. Before the credit was taken or utilized the mistake was brought to its notice. The assessee accepted the mistake and immediately reversed the entry. Thus the assessee did not take the benefit of the wrong entry in the account books. As he had taken credit in a sum of ₹ 11,691-00, a sum of ₹ 154-00 was the interest payable from the sate the duty was payable, which they promptly paid. The claim of the Revenue was, though the assessee has not taken or utilized this Cenvat credit, because they admitted the mistake, the assessee is liable to pay interest from the date the entry was made in the register showing the availment of credit. According to the Revenue, once tax is paid on input or input service or service rendered and a corresponding entry is made in the account books of the assessee, it amounts to taking the benefit of Cenvat credit. Therefore interest is payable from that date, though, in fact by such entry the Revenue is not pt to any loss at all. When once the wrong entry was pointed out, being convinced, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court dismissed the appeal summarily by observing interalia . As follows: (Para 9) :- 9. It is undisputed fact that the Assessee was entitled for the Cenvat Credit under the Cenvat Credit Rules. It is also not disputed that during the period 28-2-2004 to 18-3-2004 the Assessee had paid Central Excise Duty in excess of ₹ 9,31,360/-. The purchasers have reversed the Cenvat Credit in their Cenvat account of ₹ 9,31,360/-, therefore, the Assessee was entitled for the refund of excess amount paid in accordance to the provisions of the Act. Instead of claiming refund separately, the Assessee has taken Cenvat Credit of the said amount in the Cenvat account. Such amount credited in the Cenvat account was available for the payment of duty but the same was not utilized for payment of duty and subsequently, the Assessee has reversed the Cenvat Credit entry in the Cenvat account. The Apex Court in the case of Commissioner of Central Excise, Mumbai-I v. Bombay Dyeing Manufacturing Company Limited, reported in 2007 (215) E.L.T. 3 (S.C.) has held that where before the utilization of the credit amount if the entry is reversed it amounts to not taking credit. Once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly taken or wrongly utilized, interest, is recoverable under Rule 14 of the Rules. However, in the light of the aforesaid decision of the Supreme Court, when the entry has been reversed before utilization, the same amounts to not taking credit. In the circumstances, where CENVAT credit is taken wrongly, but reversed before the same is utilized, it amounts to not taking credit. Accordingly, when no credit is taken, the provisions of Rule 14 of the Rules would not be attracted. The view adopted by the Tribunal as well as the authorities below is, therefore, in consonance with the view taken by the Supreme Court in the above referred decision. (vi) The above decision was also followed by Hon ble High Courts in following judgment: (a) Steelco Gujarat Ltd. Vs UOI [2012 (285) E.L.T. 161 (Bom.)], (b) CCE C Vs. Sweet Industries 2011 (264) E.L.T. 349 Guj.), (c) CCE Vs. Ashoka Metal Dicor (P) Ltd. [2011 (21) S. T. R. 469 (All.)] (vii) Hon ble Punjab Haryana High Court in the case of CCE Vs. Maruti Udyog Ltd., [reported in 2007 (214) E.L.T. 173 (P H) has held that the Assessee is not liable to pay interest as the credit was only taken as an entry in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire argument put forth from the side of the Revenue was based upon the decision in the case of Ind-Swift Laboratories Ltd. (supra). The appeal filed by the Revenue was dismissed by Hon ble High Court. 10. Appellant Revenue is also in appeal against the impugned order wherein the ld. Commissioner(Appeals) on page 10 of Order-in-Appeal has held that the respondent assessee to pay penalty of ₹ 1,25,694/- but has erred in not ordering for payment of interest on such irregularly availed Cenvat Credit. 11. On perusal of the records I find that the appellant Revenue is in appeal on two grounds, - First issue is that the Commissioner(Appeals) has erred in observing that disallowance of Cenvat Credit of ₹ 5,57,970.10 which the assessee has only availed, but not utilized, neither penalty nor interest can be levied. In terms of Rule 14 of Cenvat Credit Rules, 2004, the assessee is liable to pay interest on Cenvat Credit taken irregularly even though the same was not availed by the respondent assessee. The second issue is regarding irregularly availed Cenvat credit of ₹ 1,25,694. The Commissioner(Appeals) has observed that the same was disallowed since it was avail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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