Appeal allowed for M/s Secure Meters Ltd. on interest liability dispute. Rule 6(5) Cenvat Credit Rules applied.

The appeal was allowed in favor of the appellant, M/s Secure Meters Ltd., in a case concerning interest liability on reversed Cenvat credit amount. The Tribunal found that the interest demand on the reversed amount was not sustainable as per Rule 6(5) of Cenvat Credit Rules and a favorable CESTAT decision. The impugned order was set aside, ruling in favor of the appellant and distinguishing the decisions cited by the Revenue as not applicable to the case at hand.

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Issues:
Appeal against interest liability on reversed Cenvat credit amount.

Analysis:
The appellant, M/s Secure Meters Ltd., appealed against sustaining interest liability on the Cenvat credit amount reversed by them. The issue arose when the Revenue pointed out that the Cenvat credit taken for banking and financial services, utilized for four exempted units along with the duty-paying Udaipur unit, was non-Cenvatable. The department issued a Show Cause Notice demanding interest on the reversed Cenvat amount, leading to the confirmation of interest liability by the Order-in-Original and the impugned order in appeal.

The appellant argued that Rule 6(5) of Cenvat Credit Rules allows Cenvat credit for banking and financial services not exclusively used for exempted goods. They claimed that the said services were used for all units, including the Udaipur unit, which paid duty. Citing a CESTAT decision in their favor, the appellant contended that interest cannot be imposed. On the other hand, the Revenue argued that once the Cenvat credit was reversed without protest, interest was due for the period the amount was in the Cenvat account. They cited legal precedents to support their stance.

Upon examination, it was found that the liability of interest was based on the reversed Cenvat credit amount, not its admissibility. Considering Rule 6(5) of Cenvat Credit Rules and the CESTAT decision in the appellant's case, it was concluded that the interest demand on the reversed amount was not sustainable. The Tribunal's previous observations on the full Cenvat credit availability for services used in manufacturing units making exempted and dutiable goods supported this decision. The amendments to Rule 7 of Cenvat Credit Rules were also discussed, but deemed irrelevant to the case's timeline.

In light of the above analysis, the impugned order was set aside, and the appeal was allowed. The decisions cited by the Revenue were considered distinguishable and not applicable to the present proceedings, leading to a favorable judgment for the appellant.

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