Unutilized Cenvat credit reversal did not attract interest where non-utilisation was shown and no basis for levy existed.

Interest was held not leviable on Cenvat credit that remained unutilized and was directed to be reversed. The credit had been found inadmissible for certain items, but the only surviving question was whether interest could be charged on the unutilized amount. The record showed that the reversal direction itself indicated non-utilisation of the credit, and no specific basis for imposing interest on such unutilized credit was established. The Revenue's challenge therefore failed.

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Issues: Whether interest can be levied on Cenvat credit that had remained unutilized and was directed to be reversed.

Analysis: The credit in question was found to be not admissible in respect of certain items, and the only surviving controversy was whether interest could be charged on the amount lying unutilized. The finding recorded below was that the direction for reversal itself showed that the credit had not been utilised, and that there was no specific basis for levying interest on such unutilized credit. No infirmity in that conclusion was demonstrated.

Conclusion: Interest was not leviable on the amount of Cenvat credit that remained unutilized and was ordered to be reversed, and the challenge by the Revenue failed.

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