2011 (6) TMI 575 - AT - Central Excise

Manufacturers of 'SG Iron Rough Castings' must pay interest on wrongly claimed credit, says CESTAT Chennai.

The Appellate Tribunal CESTAT, Chennai upheld the levy of interest on wrongly claimed credit by manufacturers of 'SG Iron Rough Castings'. The Tribunal ... Levy of interest on wrongly taken credit – Held that:- According to Rule 15 of Cenvat Credit Rules, 2004 where the credit has been taken or utilised wrongly, the same shall be recovered along with interest from the manufacturer and the provisions of Section 11A and 11AB of the Central Excise Act, 1944 shall apply mutatis mutandis for effecting such recovery, Padmashri V.V. Patil S.S.K. Ltd. (2007 - TMI - 1645 - HIGH COURT, BOMBAY - Central Excise) , levy of interest upheld and appeal rejected Issues: Challenge to levy of interest on wrongly taken creditAnalysis:The judgment by the Appellate Tribunal CESTAT, Chennai involved the challenge to the levy of interest on wrongly taken credit by the assessees engaged in the manufacture of 'SG Iron Rough Castings'. The key issue was the imposition of interest amounting to Rs. 17,784/- on the incorrectly claimed credit of Rs. 76,199/-.The Tribunal considered the provisions of Rule 15 of the Cenvat Credit Rules, 2004, which mandate the recovery of wrongly taken credit along with interest from the manufacturer. Referring to the case law of Commissioner of Central Excise, Coimbatore v. Precot Mills Limited, the Tribunal highlighted that the payment of interest is a statutory requirement when CENVAT credit has been erroneously availed. The judgment emphasized that interest is chargeable in all cases of non-payment or short payment, as established in the decision of the Hon'ble Bombay High Court in Commissioner of Central Excise & Customs, Aurangabad v. Padmashri V.V. Patil S.S.K. Ltd.In light of the legal provisions and precedents cited, the Tribunal upheld the levy of interest as confirmed in the impugned order. The appeal challenging the imposition of interest on the wrongly taken credit was rejected, affirming the statutory obligation to pay interest when CENVAT credit has been availed erroneously.Overall, the judgment underscored the mandatory nature of interest payment in cases of wrongly claimed credits, aligning with established legal principles and precedents to dismiss the appeal against the levy of interest.