Cenvat credit wrongly availed but not utilised and later reversed: penalty and interest were held unsustainable.

Wrongful availment of Cenvat credit, without its utilisation and followed by reversal after the adjudication order, did not justify penal consequences or interest. The Tribunal applied the principle that mere availment, in the absence of use of the credit and with subsequent reversal, is insufficient to sustain liability. Penalty and interest were therefore held not sustainable and were set aside in favour of the assessee.

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Issues: Whether penalty and interest were leviable where Cenvat credit was wrongly availed but not utilized and was reversed after receipt of the adjudication order.

Analysis: The credit in dispute was found to have been reversed after the adjudication order. The record showed that the credit had not been utilized. In such circumstances, the Tribunal followed the principle that mere wrongful availment of credit, without utilization and with subsequent reversal, does not warrant penal consequences or interest.

Conclusion: Penalty and interest were not sustainable and were set aside in favour of the assessee.

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