TaxTMI 
TaxTMI 
2013 (9) TMI 413
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....le to the Central Excise Tariff Act, 1985. Out of these Di-Calcium Phosphate was fully exempted from excise duty. During the period 1-1-1999 and 19-10-2000, it was noticed that M/s. Rama Industries Ltd. had taken credit of Rs. 9,44,601/- on plant and machinery used exclusively for the manufacture of exempted final products namely Di-Calcium Phosphate. When it was pointed out to M/s. Rama Industries that they could not take Cenvat credit of duty paid on machines exclusively in the manufacture of exempted goods, they reversed the said amount under the Cenvat Account No. However, an amount of Rs. 4,62,003/- appeared to be payable as interest for having taken the credit wrongly. 2. A show cause notice was issued for recovering the said inter....
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....s no intention on their part to claim wrongly. Since the credit was not utilized and was reversed immediately when the matter was pointed out, it is very clear that there was no intention to evade duty. It is pointed out that Rule 173Q can be invoked only subject to provision of Section 11AC and Section 11AC is applicable only when there is fraud, suppression, misdeclaration or any act with intent to evade payment of duty. Since no such motive is attributed to them, no penalty can be imposed on them and the penalty of Rs. 5 lakhs imposed by the Commissioner (Appeals) requires to be set aside. 6. The learned DR on the other hand relies on the decision of the Apex Court in the case of Union of India v. Ind-Swift Laboratories Ltd. reported ....
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....1AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries." 9. The above rule came into force on 10-9-2004. But even prior to that there were similar provisions. These are reproduced in paras 9.1 to 9.3. But prior to 1-4-2000 the rules were distinctly different as may be seen from the relevant rule reproduced in para 9.3. 9.1 From 1-7-2001 to 10-9-2004 "Rule 12. Recovery of CENVAT credit wrongly taken. - Where the Cenvat credit has been taken or utilized wrongly, the same along with interest shall be recovered from the manufacturer and the provisions of sections 11A and 11AB of the Act shall apply mutatis mutandis for effecting such recoveries." 9.2 From 1-4-2000 t....
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....s hereby declared that the provisions of this sub-rule shall not apply to cases where the credit disallowed became payable before the 23rd day of July, 1996." 10. The ruling of the Apex Court in the case of Ind-Swift Laboratories (supra) is that the expression credit taken or utilized cannot be interpreted to mean 'credit taken and utilized.' There is no general ruling that if Cenvat credit is wrongly taken, interest on such amount wrongly taken its reversal be paid. 11. Now the question is when such provision was introduced for the first time - such provision was introduced in Rule 57AH for the first time with effect from 1-4-2000. So there cannot be an argument that interest was payable for taking wrong credit under the Rules provid....