2009 (6) TMI 314 - AT - Central Excise

Tribunal waives penalty, grants rectification for unused credit balance. Interest demand set aside.

The Tribunal confirmed the demand and interest on exempted goods but waived the penalty. The Appellants' application for rectification was granted, ... Application for rectification of mistake in regard to confirmation of the interest amount - common inputs used in dutiable and exempted goods – demand of 8% and interest confirmed – interest on amount of 8% paid belatedly - Appellants states that by mistake, it was not argued on behalf of the Appellants at the time of hearing of the case leading to passing of the impugned Order that the Appellants had sufficient credit balance in their account and therefore, they had not utilized the credit and that in such a case no interest was payable - I find that the it is a fact that the Appellants had sufficient credit balance in their CENVAT Credit records at all points of time by taking the balance in the RG-23A and RG-23C Accounts altogether besides, I find that Rule 6 of the CENVAT Credit Rules clarified that the amount of 8% required to be paid by debit in Cenvat credit - I am of the view that no interest is payable in the present case. Accordingly, the impugned Order of the Tribunal is modified – application is allowed Issues:- Whether interest is payable on exempted goods when there is a sufficient credit balance in the CENVAT Credit recordsRs.- Interpretation of Rule 6 of the CENVAT Credit Rules regarding payment on exempted goods.- Application for rectification of mistake in regard to confirmation of the interest amount.Analysis:1. Interest on Exempted Goods: The Appellants had taken credit for common inputs and manufactured Liquid Nitrogen, some of which was cleared without duty payment. The Tribunal confirmed the demand and interest but waived the penalty. The Appellants filed an application for rectification, arguing that they had sufficient credit balance and had not utilized it, citing a relevant case law. The Revenue contended that interest was due as per Section 11AB of the Central Excise Act, 1944, when payable amounts were not paid.2. Interpretation of Rule 6: The Appellants maintained separate accounts for input duty credit and capital goods credit. They argued that they had enough credit balance at all times, supported by a chart. The Member analyzed Rule 6 of the CENVAT Credit Rules, noting that the Appellants had sufficient CENVAT credit balance. The Rule allowed payment on exempted goods by debiting the CENVAT credit or otherwise. Relying on a precedent upheld by higher courts, the Member concluded that no interest was payable due to the Appellants' unused credit amount.3. Rectification of Mistake: The Appellants' Advocate clarified the credit balance discrepancy between RG-23A and RG-23C accounts, emphasizing the overall sufficient credit balance. After considering both sides, the Member found in favor of the Appellants, modifying the Tribunal's order to confirm duty demand but set aside the interest demand. The Miscellaneous Application for rectification was allowed accordingly.In conclusion, the judgment analyzed the issue of interest payment on exempted goods in the presence of a sufficient credit balance, interpreting Rule 6 of the CENVAT Credit Rules to determine the Appellants' liability. The decision highlighted the importance of maintaining accurate credit records and applied relevant case law to resolve the matter in favor of the party with unused credit balance, ultimately setting aside the interest demand.