2018 (2) TMI 218 - AT - Central Excise

Tribunal Upholds Interest Demand on Reversed Cenvat Credit, Emphasizes Precedents for Tax Clarity

The Tribunal upheld the demand for interest on wrongly taken and reversed cenvat credit, following the legal interpretations of the apex court and Bombay ... Demand of interest - cenvat credit wrongly taken and reversed by them - Held that: - reliance placed in the case of The Commissioner of Central Excise, Pune-I Versus M/s GL & V. India Pvt Ltd [2015 (5) TMI 375 - BOMBAY HIGH COURT], where it was held that where CENVAT credit has been taken and utilized wrongly, interest should be payable from the date the CENVAT credit has been utilized wrongly for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty - demand upheld - appeal dismissed - decided against appellant. Issues:Appeal against demand of interest on wrongly taken and reversed cenvat credit.Analysis:The appellants availed excess cenvat credit during Nov. 2011 to Feb. 2012, which was detected during internal audit and reversed. The revenue sought interest on the amount for the period between availing and reversal. The appellants argued they had not utilized the credit, citing decisions of Karnataka High Court and Tribunal. They submitted data showing total credit available and utilized each month. The revenue relied on the decision of the apex court in Ind Swift Laboratories. The Tribunal examined Rule 14 of the Cenvat Credit Rules, which mandates recovery of wrongly taken credit with interest. The apex court's interpretation clarified that interest is payable when credit is wrongly utilized, not just taken. The Tribunal dismissed the appeal, following the precedents of the apex court and Bombay High Court, emphasizing that interest is payable from the date of wrong utilization.In conclusion, the Tribunal upheld the demand for interest on wrongly taken and reversed cenvat credit, in line with the legal interpretation provided by the apex court and the Bombay High Court. The appellants' argument based on the Karnataka High Court decision was not accepted, as the Tribunal followed the precedence set by higher courts. The judgment highlights the importance of correctly interpreting and applying tax statutes without importing assumptions or deficiencies, ensuring clarity and consistency in tax liabilities.