Interest chargeable under specific rule on reversed amount; tribunal rejects appellant's arguments. The tribunal found interest legally chargeable under Rule 6(3A)(e) of the Cenvat Credit Rules, 2004 on the reversed amount. It clarified that interest was ...
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Interest chargeable under specific rule on reversed amount; tribunal rejects appellant's arguments.
The tribunal found interest legally chargeable under Rule 6(3A)(e) of the Cenvat Credit Rules, 2004 on the reversed amount. It clarified that interest was not applicable under Rule 14 or Section 11AA, but under Rule 6(3A)(e) specifically. Rejecting the appellant's arguments, the tribunal held that interest became chargeable once the amount was reversed under Rule 6(3A). Consequently, the tribunal upheld the impugned order, dismissing the appeal.
Issues: Chargeability of interest on the reversal of amount under Rule 6(3A) of Cenvat Credit Rules, 2004.
In this case, the appellant was engaged in the sale of readymade garments, availing Cenvat credit for common inputs services used in manufacturing and trading goods. The department contended that for traded goods, exempted from service tax, the appellant must pay an amount equal to the Cenvat credit attributable to those goods under Rule 6(3A) of the Cenvat Credit Rules, 2004. The appellant reversed the amount as required but did not pay interest on the late reversal, which was demanded in the impugned order. The central issue was the chargeability of interest on the reversed amount of Rs. 81,75,709.
The appellant argued that interest under Rule 14 could not be demanded as Rule 14 applies to cases of wrongful availment of Cenvat credit, not applicable in this scenario where there was no short payment of duty. Additionally, they contended that Rule 6(3A)(e) could not be invoked as it was delegated legislation. The appellant also claimed that interest was not payable for the years 2011-12 and 2012-13 as it was beyond the normal period.
The Revenue reiterated the findings of the impugned order, supporting the demand for interest on the reversed amount.
After considering both sides' submissions and examining the records, the tribunal found that interest was legally chargeable under Rule 6(3A)(e) of the Cenvat Credit Rules, 2004. The tribunal agreed that interest was not chargeable under Rule 14 or Section 11AA, but clarified that for specific payments under Rule 6(3A), interest was applicable as per Rule 6(3A)(e). Rejecting the appellant's arguments, the tribunal held that once the amount was reversed under Rule 6(3A), interest became chargeable as part of the principal amount. Therefore, the tribunal upheld the impugned order, dismissing the appeal.
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