Interest on wrongly availed Cenvat credit applies from clearance date, even if the credit is reversed at month-end.

Cenvat credit wrongly availed on inputs cleared as such remains liable to interest from the date of clearance, because the credit becomes reversible when the inputs leave the factory without use in manufacture. Reversal only at month-end does not cure the wrongful availment or remove the burden for the period during which the credit was retained. The Tribunal treated the intervening deprivation of duty as sufficient to sustain interest, and upheld the demand.

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Issues: Whether interest was payable on Cenvat credit wrongly availed on inputs cleared as such, even though the credit was reversed on the last day of the month.

Analysis: The appellant had availed Cenvat credit on inputs and cleared the inputs as such without use in manufacture, reversing the credit only at the end of the month. The Tribunal held that credit became reversible on the date of clearance and that the revenue was deprived of duty for the intervening period. Mere month-end reversal did not cure the wrongful availment or extinguish the interest burden arising from the temporary retention of credit.

Conclusion: Interest was payable, and the challenge to the demand failed.

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