2010 (12) TMI 389

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.... Tax Appellate Tribunal (the Tribunal) by proposing the following question :- "Whether, in the facts and circumstances of the case, CESTAT is justified in holding that interest is not required to be paid when there is express provision in Rule 14 of the Cenvat Credit Rules, 2004, to the effect the interest is required to be paid in instances where cenvat credit has been taken wrongly?" 2. The respondent assessee is engaged in the manufacture of Polybags/flat films falling under Chapter 39 of Central Excise Tariff Act, 1985. During the course of audit, it was observed that the assessee had wrongly availed cenvat credit of Rs. 2,93,614/-. The assessee reversed the said credit from its cenvat credit account. However, it failed to pa....

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....hat the intention of legislature behind enacting such a provision is to strictly discourage the act of not only wrongly utilising the credit but of wrongly taking credit as well. It was submitted that the Tribunal has failed to appreciate that there is no scope of ambiguity in the text of Rule 14 of the Rules, and on a literal interpretation, it is apparent that in both the cases, that is, whether the credit is wrongly taken or utilized, the department is required to effect the recovery of cenvat credit along with interest. It was urged that if the restrictive interpretation adopted by the adjudicating authority is accepted for nor chargeability of interest then no recovery of interest on erroneous credit taken can be made under Rule 14 of ....

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.... view adopted by the Commissioner (Appeals). 6. In the light of the undisputed facts of the case, viz., the assessee had wrongly availed of cenvat credit, which came to be reversed from the cenvat credit account before utilisation, the short issue that arises for consideration is as to whether an assessee would become liable to pay interest under Rule 14 of the Rules when it has reversed the cenvat credit wrongly taken by it before utilizing the same. 7. In this regard it may be germane to refer to the decision of the Apex Court in the case of Commissioner of C. Ex. Mumbai-I v. Bombay Dyeing & Mfg. Co. Ltd., 2007 (215) E.L.T. 3 (S.C.), wherein it has held been that when an entry has been reversed before utilization the same ....