Interest on irregular Cenvat credit depends on actual utilisation; matter remanded for fresh factual determination.

Interest on irregular Cenvat credit turned on whether the ineligible credit was actually utilised, as the assessee had already accepted reversal of the credit. The Tribunal noted that the credit account extract relied on before it was not before the lower appellate authority, and the precedent on interest and utilisation had not been examined below. A factual finding on the extent of utilisation was therefore necessary before interest could be applied. The matter was remanded to the Commissioner (Appeals) for fresh decision after due opportunity.

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Issues: Whether interest was payable on irregular Cenvat credit taken by the assessee, and whether the matter required reconsideration on the question of actual utilization of such credit.

Analysis: The dispute was confined to the levy of interest on ineligible Cenvat credit. The assessee did not dispute reversal of the credit, but contended that interest could arise only if the irregular credit had actually been utilized. The record before the lower appellate authority did not contain the credit account extract relied upon before the Tribunal, and the applicability of the cited precedent on interest and utilization had not been examined by the authorities below. In these circumstances, a factual determination was necessary on the extent of utilization of the credit and the consequent applicability of interest.

Conclusion: The question of interest was not finally determined and the matter was remanded to the Commissioner (Appeals) for fresh decision after affording due opportunity.

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