Interest on wrongly taken Cenvat credit applies even without utilisation, from availment until reversal.

Interest is recoverable on wrongly taken Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 even where the credit has not been utilised, because the statutory language is disjunctive and covers credit taken or utilised wrongly. The rule was read with Rule 3, which permits taking and utilisation of credit separately, so no one-to-one correlation is required between availment and use. The earlier contrary view was not followed in light of the binding Supreme Court interpretation. Interest therefore runs from the date the credit is wrongly taken until reversal.

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Issues: Whether interest is payable under Rule 14 of the Cenvat Credit Rules, 2004 when Cenvat credit has been wrongly taken but not utilised.

Analysis: Rule 14 covers Cenvat credit taken or utilised wrongly and provides for recovery of the credit along with interest. The expression used in the rule is disjunctive, so liability to pay interest arises even if the credit is only taken wrongly. The earlier view that no interest is payable until utilisation was not accepted, since Rule 3 of the Cenvat Credit Rules, 2004 permits taking and utilisation of credit independently and there is no one-to-one correlation between the two. The decision following the contrary view was treated as not governing the issue in light of the binding Supreme Court interpretation.

Conclusion: Interest is payable on wrongly taken Cenvat credit from the date of taking until reversal, even if the credit was not utilised. The appeal fails.

Final Conclusion: The demand of interest on irregularly availed Cenvat credit was upheld and the assessee's challenge was rejected.

Ratio Decidendi: Under Rule 14 of the Cenvat Credit Rules, 2004, interest becomes recoverable on wrongly taken Cenvat credit even without utilisation, because the statutory trigger operates on taking or utilisation of credit in the disjunctive.

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