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of <h1>Interest on unutilized CENVAT credit not payable from mere availment; liability under Rule 14 starts on utilization</h1> HC held that interest on wrongly availed CENVAT credit is compensatory and arises only when tax is actually withheld beyond its due date. Following its ... Interest due to wrong availment of Cenvat Credit – Held that:- As decided in BILL FORGE PVT. LTD. Versus COMMISSIONER OF C. EX., BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT], interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is on the actual amount, which is withheld and the extent of delay in paying the tax from the due date. The interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is taken or utilized wrongly. - in favour of assessee. The High Court of Karnataka dismissed the Revenue's appeal challenging the Tribunal's order, which stated that no interest is payable when the Assessee reverses the entire amount of Cenvat credit used in exempted products. The Court held that interest is compensatory and is imposed on an assessee who withholds tax payment. Interest is payable from the date Cenvat credit is taken or utilized wrongly.
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