Cenvat credit interest on mere wrongful taking without utilisation remains a contested question under Rule 14 amendment.

The article addresses whether interest is leviable when Cenvat credit is wrongly taken but not utilised, and whether the amendment to Rule 14 of the Cenvat Credit Rules, 2004 is clarificatory. It notes the Tribunal's view that mere non-utilisation would not waive interest, alongside the competing authorities in IndSwift Laboratories and Strategic Engineering. The Madras High Court view recorded in the text is that, where credit is only taken and not utilised, no interest can be levied, because the amendment replacing "taken or utilised" with "taken and utilised" is treated as clarificatory. The Bombay High Court admitted the substantial question of law for consideration.

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Issues: Whether, on the facts and in the circumstances of the case, interest is leviable where Cenvat credit is wrongly taken but not utilised, and whether the subsequent amendment to Rule 14 of the Cenvat Credit Rules, 2004 is clarificatory.

Analysis: The appeal was admitted on the substantial question of law concerning the Tribunal's view that mere non-utilisation would not lead to waiver of interest. The order notes reliance on the decision in IndSwift Laboratories and the contrary view of the Madras High Court in Strategic Engineering, which held that in the absence of utilisation of credit, and in light of the amendment substituting the words "taken or utilised" with "taken and utilised", no interest can be levied and that the amendment is clarificatory.

Outcome: The substantial question of law was admitted for consideration; no final adjudication on the merits of the interest liability was made.

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