Tribunal Upholds Interest on Inadmissible Cenvat Credit, Rejects Refund Claim Appeal

The Tribunal upheld that interest on inadmissible Cenvat credit is leviable regardless of utilization, affirming the order to reverse interest on credit availed between April 2008 to July 2011. The appellant's appeal against the rejection of their refund claim was dismissed.

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Issues involved: Appeal against the order regarding the reversal of interest on Cenvat credit availed by the appellant between April 2008 to July 2011.

The judgment pertains to an appeal filed against the order passed by the Commissioner (Appeals-I) of Central Excise Ahmedabad-i. The central issue in this case is whether the appellant is obligated to reverse interest on the Cenvat credit availed between April 2008 to July 2011. The appellant had initially reversed an interest amount of Rs. 24,85,186 upon the department's audit findings of inadmissible credit availed during the mentioned period. Subsequently, they filed a refund claim for the same amount, contending that since they did not utilize the credit during that period, they should not be liable to pay interest. However, the refund claim was rejected, leading to the appellant's appeal before the Commissioner (Appeals), which was also dismissed. The appellant then approached the Tribunal for redressal.

The Tribunal referred to a previous case, CCE & ST, Surat Vs. Atul Limited, where the issue of recovery of interest on Cenvat credit, even if not utilized, was deliberated. Following an analysis of legal principles established by the Supreme Court, the Tribunal upheld that interest would indeed be leviable on inadmissible credit, irrespective of its utilization. Consequently, the impugned order was affirmed, and the appeal was dismissed.

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