Tribunal Upholds Interest on Wrong Cenvat Credit despite Reversal

The Tribunal upheld the chargeability of interest on the wrong availment of Cenvat Credit by M/s Shree Cement Ltd. despite the reversal of the credit without utilization. Citing legal precedents, including a Supreme Court decision, the Tribunal ruled that interest liability arises even if the credit is not utilized but wrongly taken. The appeals were rejected, and the liability for interest amounting to Rs. 35,14,493 was upheld based on established legal principles.

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Issues:
Chargeability of interest on wrong availment of Cenvat Credit.

Analysis:

Issue 1: Chargeability of interest on wrong availment of Cenvat Credit

The case involved two appeals filed by M/s Shree Cement Ltd. against a common order-in-original passed by the Commissioner Central Excise Jaipur-II regarding the chargeability of interest on the wrong availment of Cenvat Credit amounting to Rs. 35,14,493. The appellant argued that since they reversed the entire Cenvat Credit without utilizing it, interest should not be charged. The appellant cited the decisions of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court to support their argument. On the other hand, the department reiterated the findings in the impugned order and stated that interest liability arises when credit is wrongly taken by the assessee. They cited various case laws to support their stance.

Upon careful consideration of the facts, submissions, and case laws cited, the Tribunal noted that the Cenvat credit was indeed wrongly taken by the appellant and later reversed without utilization. The key issue was whether there is a liability of interest for the period when the credit was lying in the appellant's account. The Tribunal referred to the Hon'ble Supreme Court's decision in Union of India vs. Ind-Swift Laboratories Ltd., where it was held that even if the credit was not utilized but taken wrongly, interest liability would still arise for the period it remained in the account of the assessee. The Tribunal emphasized that the appellant's cited case laws did not entitle them to interest relief as the Supreme Court's decision was clear on the matter. The Tribunal also referred to the decisions of other High Courts to support their conclusion.

In conclusion, the Tribunal rejected both appeals based on the precedent set by the Hon'ble Supreme Court and other High Court decisions. The impugned order was sustained, and the liability for interest on the wrong availment of Cenvat Credit was upheld.

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