Wrongful Cenvat credit availment can support interest and penalty when liability is clearly quantified in the notice.

Wrongful availment of excess Cenvat credit can attract both interest and penalty where the show cause notice specifically identifies the credit taken, the dates involved, and the quantified interest liability. Rule 12 of the Cenvat Credit Rules, 2002 supports recovery of interest on wrongly taken credit, and Rule 13(1) permits penalty for wrongful availment of credit. Reliance on a customs ruling was rejected because that case concerned the absence of a duty demand under the Customs Act, whereas here the liability was clearly set out in the notice. The interest demand and penalty were upheld as valid.

---

---

Issues: Whether interest and penalty were sustainable for wrong availment of excess Cenvat credit when the show cause notice quantified the credit wrongly taken and the interest liability.

Analysis: The excess credit taken by the assessee was specifically identified in the show cause notice with dates, and the proposed interest was also quantified. Rule 12 of the Cenvat Credit Rules, 2002 supported recovery of interest on wrongly taken credit, while Rule 13(1) permitted penalty for wrongful availment of credit. The reliance on the customs decision was found inapposite because that case turned on the absence of a duty demand under Section 28(2) of the Customs Act, 1962 and the resulting nexus for penalty under Section 114A of that Act, whereas in the present matter the liability was clearly set out in the notice.

Conclusion: The demand of interest and the penalty were upheld as valid and sustainable.

Final Conclusion: The impugned order imposing interest and penalty for wrongful Cenvat credit was sustained, and the appeal failed.

Ratio Decidendi: Where wrong availment of Cenvat credit and the consequential interest liability are specifically quantified in the show cause notice, penalty and interest may be imposed under the Cenvat Credit Rules for wrongful credit availment.

---