Cenvat credit reversed before use does not attract interest or penalty under Rule 14.

Where Cenvat credit on capital goods was wrongly availed but reversed before use, Rule 14 of the Cenvat Credit Rules, 2004, as read after amendment, was treated as applying to credit that is both taken and utilised. On that basis, mere availment without utilisation, followed by reversal, did not by itself trigger liability for interest or penalty. The Tribunal applied its earlier decision and the jurisdictional High Court's view to hold that interest and penalty were not leviable in such circumstances.

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Issues: Whether interest and penalty are leviable where Cenvat credit on capital goods was wrongly availed but reversed before use.

Analysis: The Tribunal followed its earlier decision, which in turn applied the jurisdictional High Court's view that Rule 14 of the Cenvat Credit Rules, 2004, as subsequently amended, contemplates credit that is taken and utilised. Mere availment of credit, without utilisation and followed by reversal, does not by itself give rise to interest or penalty liability.

Conclusion: Interest and penalty were not leviable on the assessee.

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