Interest calculation for cenvat reversal

[Mathurthi RamKumar]

Dear Sir'sGreetings of the day...Kindly guide me for following problem. In excise audit officers found we wrongly take cenvat credit on capital goods. They give notice to reversal the cenvat amount along with interest. My doubt is..Invoice date is 05.03.2014 and we accounted in 15.03.14 and take cenvat credit in march and paid excise in April 5th. (march amount paid in april)Can i calculate interest for accounted date to till date (i.e 15.03.14) or utilized date (i.e 05.04.2014) to till date?Kindly guide me.RegardsM.RamKumar 99498 40959

[DR.MARIAPPAN GOVINDARAJAN]

It is better to pay interest from 15.03.2014 to the date of reversal/payment of duty.

In respect of my best knowledge the interest should be calculated from the actual invoice date to the date of payment of duty

[Rajagopalan Ranganathan]

Sir,

In respect of cenvat credit wrongly taken and utilized, interest is payable from the date of taking credit till date of repayment of the wrongly taken credit. In addition since you have utilized the wrongly taken credit for discharging duty on the final product such final product will be treated as non-duty paid and the same is liable for confiscation and penalty may be imposed on you. You are fortunate that the Department has issued show cause notice only for reversal of cenvat amount along with interest. In this connection you may refer to rule 15 of Cenvat Credit Rules, 2004.

[Mahir S]

Yes sir, very well answered above. Further, Penalty may also be imposed by the department..

[YAGAY and SUN]

Dear Mathurthi,

If, there is sufficient balance in your CENVAT credit Account, then, there is no need to pay the interest at all. Interest is payable when CENVAT credit availed and Utilized (wrongly). Before paying interest, please do also check this aspect.

Regards

Sameer Malhotra,- Consultant

YAGAY and SUN

Management, Business and Indirect Tax Consultants

[Mahir S]

Sir,

The fact that notice issued by the department for payment of interest itself is sufficient to consider the view that balance of cenvat pertaining to wrong availment was not available with the assessee in his capital goods cenvat credit account, at the time of audit and detection of audit para.

[MUKUND THAKKAR]

Rajagopalan Ranganathan

I appreciate your answer..

AI Summary

Cenvat credit reversal interest runs from the date of availing credit until its repayment; misuse may attract penalty.
Interest on wrongly availed CENVAT credit is payable from the date the credit was taken (the accounting/availment date) until the date of repayment or reversal. Utilisation of wrongly taken credit to discharge duty exposes the final product to treatment as non-duty-paid and may attract confiscation and penalty. If sufficient credit balance exists to adjust the wrong availment, separate interest payment may not be required. The obligations arise under the CENVAT Credit Rules.