2006 (10) TMI 63 - HC - Central Excise

High Court rules no interest due for unutilized Modvat credit

The High Court dismissed the revenue's appeal on the recovery of interest for wrongly availed Modvat credit by an assessee in 1998. The Tribunal held that ... Modvat credit - interest on wrongly availed Modvat credit - Rule 57E of the Central Excise Rules, 1944 - availment versus mere entry in Modvat records - precedent in Osram Surya (P) Limited v. Commissioner of Central Excise Interest on wrongly availed Modvat credit - availment versus mere entry in Modvat records - Rule 57E of the Central Excise Rules, 1944 - precedent in Osram Surya (P) Limited v. Commissioner of Central Excise - Whether interest is payable where Modvat credit was disallowed although the assessee made only an entry in Modvat records and did not in fact avail the credit. - HELD THAT: - The Court accepted the Tribunal's factual finding that the assessee had not in fact availed the Modvat credit but had only recorded an entry in the Modvat record (RG-23A Part-II). In that factual matrix the revenue could not demonstrate that duty was actually unpaid by reason of availment of credit, and consequently no interest was exigible. The appellant could not show any legal basis to require payment of interest when there was no actual availment making the assessee liable to pay duty. The Tribunal's conclusion that interest was not payable was therefore upheld and no substantial question of law was found to arise.Appeal dismissed; no interest payable where Modvat credit was not actually availed but only entered in records.Final Conclusion: The High Court dismissed the revenue's appeal, upholding the Tribunal's factual finding that the assessee did not in fact avail Modvat credit and therefore was not liable to pay interest; no substantial question of law was made out. The High Court dismissed the appeal by the revenue regarding the recovery of interest on wrongly availed Modvat credit by an assessee in 1998. The Tribunal ruled that the assessee did not actually avail of the credit but only made an entry in the Modvat record, therefore interest was not payable. No substantial question of law was found to arise.