Wrongly taken CENVAT credit attracts interest despite later reversal, while Rule 6(3AA) issues were left for de novo consideration.

Interest is recoverable under Rule 14 of the CENVAT Credit Rules, 2004 when credit is wrongly taken, wrongly utilised, or erroneously refunded, and later reversal of the credit does not by itself extinguish the liability arising from wrongful availment. In the same matter, the applicability of Rule 6(3AA) was left for reconsideration by the adjudicating authority in de novo proceedings, where the parties' submissions on net liability were to be examined afresh in accordance with law.

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Issues: (i) Whether interest is payable on CENVAT credit wrongly taken even if the credit is later reversed; (ii) whether the matter required reconsideration of liability under Rule 6(3AA) of the CENVAT Credit Rules, 2004 during de novo proceedings.

Issue (i): Whether interest is payable on CENVAT credit wrongly taken even if the credit is later reversed.

Analysis: Rule 14 of the CENVAT Credit Rules, 2004 provides for recovery with interest where credit is taken, utilized wrongly, or erroneously refunded. The binding interpretation of that provision is that interest liability arises on the happening of any of those contingencies and reversal of credit does not, by itself, negate the consequence of wrongful availment.

Conclusion: The issue is decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the matter required reconsideration of liability under Rule 6(3AA) of the CENVAT Credit Rules, 2004 during de novo proceedings.

Analysis: The matter had been remanded for fresh determination of net liability, and the relevant submissions on the applicability of Rule 6(3AA) were directed to be considered by the adjudicating authority at the de novo stage.

Conclusion: The issue was left for consideration in the remand proceedings and did not alter the result of the appeal.

Final Conclusion: The Revenue succeeded in the appeal, and the Tribunal's view on interest was interfered with, while the adjudicating authority was directed to examine the matter afresh in accordance with law.

Ratio Decidendi: Under Rule 14 of the CENVAT Credit Rules, 2004, interest becomes recoverable when credit is wrongly taken, wrongly utilized, or erroneously refunded, and subsequent reversal does not erase the liability arising from wrongful availment.

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