2018 (2) TMI 1104 - AT - Central Excise

Successful appeal overturns demand for interest on delayed CENVAT credit reversal. Precedent cited.

The appeal was successful as the Judicial Member found in favor of the appellant, setting aside the order that upheld the demand for interest on delayed ... Interest on delayed reversal of CENVAT credit - DTA unit is converted into a 100% EOU - Held that: - the issue is squarely covered in favour of the appellant by the decision rendered in the case of CCE vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available - appellant had sufficient balance in their CENVAT credit account and had not utilized the same and therefore, they are not liable to pay the interest - appeal allowed - decided in favor of appellant. Issues:1. Liability to pay interest on delayed reversal of CENVAT credit upon conversion of DTA unit into 100% EOU.2. Applicability of judicial precedents in determining the liability for interest payment.Analysis:Issue 1: The appeal was against an order rejecting the appellant's appeal and upholding the demand for interest on delayed reversal of CENVAT credit upon conversion of a DTA unit into a 100% EOU. The appellant contended that they had a significant balance in their CENVAT credit account and therefore should not be liable to pay the interest. The original authority confirmed the demand for interest and imposed a penalty, leading to the appeal before the Commissioner (A) and subsequently to the present appeal.Issue 2: The appellant argued that the impugned order was contrary to binding judicial precedent, citing the decision in Sun Pharmaceuticals Industries vs. CCE, which held that upon conversion into a 100% EOU, the assessee is not required to reverse the CENVAT credit. Additionally, the appellant relied on the decision in Commissioner of Central Excise vs. Bill Forge Pvt. Ltd., which supported their position that having a sufficient balance in the CENVAT credit account absolved them from the liability to pay interest. The learned AR, however, reiterated the findings of the impugned order.The Judicial Member, after considering the submissions and the legal precedents cited, found that the issue was squarely covered in favor of the appellant by the decision in the case of CCE vs. Bill Forge Pvt. Ltd. Based on this precedent, the Judicial Member held that the impugned order was not sustainable in law. Consequently, the Judicial Member set aside the order, allowing the appeal of the appellant. The decision was dictated in open court on 26/12/2017.