Wrongly utilised CENVAT credit carries interest under general recovery provisions, not just the later special amendment.

Retrospectively barred AED (GSI) CENVAT credit, once wrongly used for payment of BED and SED, attracted recovery together with interest under the general recovery framework of Rule 12 read with Sections 11A and 11AB of the Central Excise Act, 1944. The specified relevant date under Section 88(4) of the Finance Act, 2004 operated only for limitation on issuing notice and did not cut down liability to interest from the first day of the month following the wrong utilisation until actual payment. The later insertion of Section 88(5) by Section 124 of the Finance Act, 2005 applied only to credit still outstanding on its commencement, so liability could not be confined to that provision.

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Issues: Whether interest on wrongly utilized AED (GSI) credit accrued before 1.4.2000 and used for payment of BED and SED was payable under Section 11AB of the Central Excise Act, 1944, or was confined to the interest mechanism under Section 88(5)(v) of the Finance Act, 2004 as amended by Section 124 of the Finance Act, 2005.

Analysis: Section 88 of the Finance Act, 2004 retrospectively amended Rule 3(6) of the CENVAT Credit Rules, 2002 so that AED (GSI) credit accrued prior to 1.4.2000 could not be used for payment of BED and SED. Sub-section (4) of Section 88 provided for recovery of such wrongly utilized credit along with interest, and the recovery provisions of Rule 12 of the CENVAT Credit Rules, 2002 read with Sections 11A and 11AB of the Central Excise Act, 1944 applied. The specified relevant date under Section 88(4) was only for limitation for issuing notice and did not curtail liability to interest under Section 11AB from the first day of the month succeeding the month of wrong utilization until actual payment. The later amendment inserting Section 88(5) by Section 124 of the Finance Act, 2005 applied only where the wrongly utilized credit still remained outstanding on the date of its commencement.

Conclusion: Interest was rightly recoverable under Section 11AB of the Central Excise Act, 1944, and the assessee could not restrict liability to Section 88(5)(v) of the Finance Act, 2004 as amended.

Final Conclusion: The appeal failed, and the order confirming recovery of interest on the wrongly utilized credit was sustained.

Ratio Decidendi: Where retrospectively barred CENVAT credit is wrongly utilized, the liability to interest is governed by the general recovery and interest provisions unless the later special amendment expressly covers the outstanding credit for the relevant period.

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