Lapsed CENVAT credit cannot be revived suo motu after long delay, and wrong credit attracts interest from availment.

CENVAT credit that had lapsed for non-compliance with Rule 57F(17)(b) could not be revived suo motu after a long delay, even by relying on later case law; the attempted belated availment was therefore impermissible and the disallowance was sustained. Interest was also held payable on wrongly availed credit under Rule 14 where the credit was later utilised in part, because interest liability arises from the date of wrong availment rather than only from actual debit or full utilisation. The commentary thus states that lapsed credit cannot be unilaterally restored after acceptance of the lapse, and wrong credit attracts interest from the date it is taken.

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Issues: (i) Whether credit not carried forward in terms of Rule 57F(17)(b) could later be taken suo motu after a long lapse of time; (ii) whether interest was payable on wrongly availed credit, where the credit was later utilised in part.

Issue (i): Whether credit not carried forward in terms of Rule 57F(17)(b) could later be taken suo motu after a long lapse of time.

Analysis: The credit had lapsed when it was not carried forward in compliance with the governing rule, and that lapse was never challenged. The belated taking of credit nearly nine years later, on the basis of subsequent case law, was held to be impermissible. Once the lapse had been accepted, the assessee could not revive the credit on its own.

Conclusion: The suo motu availment of credit was not lawful and the disallowance was sustained.

Issue (ii): Whether interest was payable on wrongly availed credit, where the credit was later utilised in part.

Analysis: Rule 14 governed interest where credit was wrongly taken or utilised. The credit was not a mere book entry, since a part of it had been utilised for duty payment. In view of the binding precedent that interest liability arises from the date of wrong availment of credit, interest was held payable.

Conclusion: Interest was payable on the wrongly availed credit.

Final Conclusion: The appeal failed in full, as the credit was held inadmissible and the interest demand was upheld.

Ratio Decidendi: Credit that has lapsed and was never challenged cannot be revived suo motu after a substantial delay, and interest on wrongly availed credit accrues from the date of wrong availment where the credit is subsequently utilised.

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