Cenvat credit interest liability arises only on transfer and utilisation, not mere retention in a separate account.

Interest was not payable on Cenvat credit alleged to have been wrongly availed where the amount remained in a separate account and was neither transferred into the Cenvat account nor used to discharge service tax liability. Mere retention of the amount did not constitute availment for the purpose of attracting interest; liability to interest arose only upon transfer and utilisation of the credit. The demand of interest was therefore set aside.

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Issues: Whether interest is payable on Cenvat credit alleged to have been wrongly availed when the credit remained in a separate account and was not utilised for payment of service tax.

Analysis: The appellant had not transferred the amount into the Cenvat account or utilised it for discharge of service tax liability. Mere retention of the amount in a separate account did not amount to availment of credit for the purpose of fastening interest liability. Interest could arise only upon transfer and utilisation of the credit.

Conclusion: The appellant was not liable to pay interest, and the demand of interest was set aside.

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