Interest on cenvat

[chaganti srinivas]

We have debited cenvat involved in the written off material as per audit obection. As per rule 3(5B), this amount can be claimed back by us as and when we put to use for further manufacturing. Do we need to pay interest on this amount, if no, please refer case laws or any circulars.

[Rama Krishana]

No, there are specific provisions for interest. There is no specific provision for interest where the reversal is made under rule 3(5B). But, yes, if you delay in making reversal of credit, you may be liable to pay interest from the date on which you were liable to reverse the credit till the date on which you reverse the credit actually.

AI Summary

Interest on cenvat reversals: no specific interest for prescribed reversal, but interest may accrue for delayed reversal.
There is no specific statutory provision for interest where reversal and subsequent re claim of cenvat credit is made under rule 3(5B); however, interest may be payable if the reversal is delayed, running from the date the taxpayer was liable to reverse the credit until the date the reversal is actually effected.