Interest on wrongly utilised Cenvat credit applies when excess credit is used before reversal under Rule 14.

Interest is payable where excess Cenvat credit on capital goods is not only wrongly availed but also utilised before reversal. Rule 14 of the Cenvat Credit Rules, 2004 permits recovery of wrongly utilised credit with interest, and applies Section 11AB of the Central Excise Act, 1944 mutatis mutandis. Once the excess credit was used for duty payment, the amount was treated as duty not paid in cash for that period, attracting interest liability. The appellant was therefore not entitled to relief.

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Issues: Whether interest was payable on excess Cenvat credit wrongly availed on capital goods and subsequently utilised before reversal.

Analysis: The credit was not merely taken incorrectly and left unutilised. It was also utilised for payment of duty on the final products before being reversed. Rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of wrongly utilised credit along with interest, and applies the interest provisions of Section 11AB of the Central Excise Act, 1944 mutatis mutandis. Once the excess credit was utilised, the effect was treated as payment of duty not having been made in cash for that period, attracting interest liability.

Conclusion: Interest was rightly confirmed and the appellant was not entitled to relief.

Ratio Decidendi: Where wrongly availed credit is also utilised, interest becomes payable under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944.

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