Cenvat credit interest and clandestine removal need proof of wrongful credit use and corroborative evidence; demands were set aside.

Interest under Rule 14 of the Cenvat Credit Rules, 2004 could not be sustained because the credit was not found to have been wrongly taken or utilised; the tribunal treated the pre-amendment registration issue as only a technical violation and set aside the interest demand. The allegation of clandestine removal of air handling units also failed because it rested on shortage and a statement without independent corroborative evidence such as buyers, transport, consideration, or other material linking the goods to secret clearance; the duty demand was therefore unsustainable. The impugned order was set aside and the appeal succeeded for the assessee.

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Issues: (i) Whether interest under Rule 14 of the Cenvat Credit Rules, 2004 was sustainable when the credit was not found to have been wrongly taken or utilised. (ii) Whether the allegation of clandestine removal of air handling units could be sustained in the absence of corroborative evidence.

Issue (i): Whether interest under Rule 14 of the Cenvat Credit Rules, 2004 was sustainable when the credit was not found to have been wrongly taken or utilised.

Analysis: Rule 14 applies only where Cenvat credit has been wrongly taken or utilised. The order itself proceeded on the basis that taking credit before amendment of the registration certificate was only a technical violation and did not justify denial of credit or penalty. In the absence of any finding that the credit was wrongly availed, the statutory basis for charging interest was not made out.

Conclusion: The interest demand was unsustainable and was set aside.

Issue (ii): Whether the allegation of clandestine removal of air handling units could be sustained in the absence of corroborative evidence.

Analysis: The allegation was founded on shortage and a voluntary statement, but the Department led no independent evidence of clandestine clearance. There was no proof of buyers, consideration, transport, or any other corroborative material linking the alleged shortage to secret removal. In such circumstances, the charge could not rest on inference alone.

Conclusion: The allegation of clandestine removal failed and the duty demand was not sustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed in full in favour of the assessee.

Ratio Decidendi: Interest under Rule 14 of the Cenvat Credit Rules, 2004 cannot be confirmed unless credit is shown to have been wrongly taken or utilised, and a charge of clandestine removal must be supported by independent corroborative evidence.

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