Retrospective interest liability on voluntarily reversed cenvat credit sustained under the Finance Act amendments.

Voluntary reversal of cenvat credit can still attract interest where retrospective amendments fasten that liability. The assessee had already reversed the credit before the Tribunal, so the dispute before the HC was confined to interest. On that basis, the Court accepted that once the principal credit stood reversed, the statutory consequence of interest followed under the retrospective operation of Sections 82 and 83 of the Finance Act, 2005, and the Tribunal's view required no interference. The interest liability was thus sustained against the assessee.

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Issues: Whether the assessee was liable to pay interest on the voluntarily reversed cenvat credit in view of the retrospective operation of Sections 82 and 83 of the Finance Act, 2005.

Analysis: The assessee had admittedly reversed the cenvat credit voluntarily before the Tribunal. The challenge before the High Court was confined to the interest component, since the earlier order had limited the scope of scrutiny to that question. Once the principal amount stood reversed by the assessee, the statutory consequence of interest followed, and the Tribunal's view that interest liability arose from the retrospective amendment under Sections 82 and 83 of the Finance Act, 2005 called for no interference.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; the assessee was held liable to pay interest.

Ratio Decidendi: Where the assessee has voluntarily reversed the credit and the statute retrospectively fastens interest liability, interest is payable on the reversed amount and no substantial question of law arises against such finding.

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