Cenvat credit entitlement on paid service tax was upheld, with no interest liability under Rule 14.

Cenvat credit on input services was held admissible where the service tax component had already been paid to the service provider, even though the balance service charges were paid later. The credit taken on receipt of the invoice was not treated as premature because the tax stood fully paid and the recipient was entitled to avail credit. On that basis, interest under Rule 14 of the Cenvat Credit Rules, 2004 was held not chargeable, and the credit was allowed.

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Issues: Whether interest under Rule 14 of the Cenvat Credit Rules, 2004 was payable when credit of input services was availed before later payment of the balance service charges, but the service tax element had already been paid to the service provider.

Analysis: The credit was taken on receipt of the invoice and the service tax amount had been paid at the first instance along with part payment. Once the service tax stood fully paid, the recipient became entitled to avail Cenvat credit. The Board circular relied upon by the appellant supported this position, and the same view had been taken in earlier decisions dealing with the same issue. In these circumstances, the credit could not be treated as having been taken before it was due, and no interest liability arose.

Conclusion: Interest under Rule 14 was not chargeable, and the appellant was entitled to the credit.

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