Unutilised Cenvat credit and later reversal did not justify interest or penalty under Rule 14.

Interest and penalty were held not leviable where Cenvat credit was taken but remained unutilised, as the credit balance in the register never fell below the disputed amount during the relevant period. The later reversal of credit, without any finding of actual utilisation, was treated as insufficient to attract liability. Applying Rule 14 of the Cenvat Credit Rules, 2004 as read with the binding precedent relied upon, mere taking of credit was not enough to trigger interest and penalty. The issue was decided in favour of the assessee.

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Issues: Whether interest and penalty are leviable where cenvat credit was taken but not utilised and was reversed later.

Analysis: The disputed credit remained available in the books and the credit register showed that the balance never fell below the amount in dispute during the relevant period. The credit was reversed later, and there was no contra finding that it had been utilised. Rule 14 of the Cenvat Credit Rules, 2004, as interpreted by the binding precedent relied upon, requires more than mere taking of credit for interest and penalty to arise.

Conclusion: Interest and penalty were not leviable; the issue was decided in favour of the assessee.

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