TaxTMI 
TaxTMI 
2014 (2) TMI 545
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....vour of the appellant which enabled them to take CENVAT credit on the said goods. The base oil so obtained on which credit was taken, was returned by the appellant to M/s. V CL and M/s. Ultraplus Lube Pvt. Ltd. and the appellant paid excise duty equivalent to the credit taken on such base oil returned. The department was of the view that taking of credit by the appellant was not permitted under law in as much as the goods were not intended for use in the manufacture of excisable goods and, therefore, credit was not admissible under CENVAT Credit Rules, 2004, ab initio. Accordingly, a show-cause notice dated 02.06.2008 was issued to the appellant proposing to recover the credit taken along with interest thereon under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A(1) and Section 11AB of the Central Excise Act, 1944. It was also proposed to impose penalty on the appellant under Rule 15 of the said Rules read with section 11AC of the said Central Excise Act. The said notice was adjudicated ad duty demand was confirmed by denying the Central Excise credit of Rs. 1,61,04,675/- and interest on the said credit wrongly taken was also confirmed. A penalty of....
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....stitution will have retrospective effect and, therefore, unless the appellant utilizes the credit, the question of recovery of CENVAT credit or interest thereon would not arise. Reliance is placed on the decision of the hon'ble apex court in the case of Indian Tobacco Association - 2005 (187) ELT 162 (S.C.) and W.P.I.L. Ltd. vs. CCE - 2005 (181) ELOT 359 (S.C.) in support of this proposition. Accordingly, it is prayed that the impugned order is not sustainable in law and therefore merits to set aside. 4. The learned A.R. appearing for the Revenue on the other hand strongly refuted the contentions raised by the learned Counsel for the appellant and submitted that the appellant suppressed the fact of taking ineligible credit on base oil received from VCL which was never intended for use in or in relation to the manufacture of any final products by the appellant. Since CENVAT credit was permissible only on inputs intended for use in the manufacture of excisable goods on which excise duty is payable, taking of credit by the appellant on the base oil is ab initio void and, therefore, the demand for the same as confirmed in the impugned order is sustainable. In as much as the appellant ....
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....ay any interest on the credit taken. During the period involved, Rule 14 of the CENVAT Credit Rules, 2004 provided for recovery of interest on the CENVAT credit taken or utilized wrongly under the provisions of the said Rule read with Section 11AB of the Central Excise Act, 1944. The issue also came up for consideration before the hon'ble apex court in the case of Union of India vs. Ind-Swift Laboratories Ltd.- 2011 (265) ELT 3 (S.C). The question before the hon'ble apex court was "when interest on irregular credit arises, is it from the date of availing of such credit or from the date of utilization?" The hon'ble apex court held that Rule 14 of the CENVAT Credit Rules, 2004 specifically provides for interest on CENVAT credit taken or utilized wrongly or erroneously refunded. Therefore, interest on irregular credit arises from the date of taking of such credit. Accordingly it was held that if CENVAT credit taken is irregularly, though not utilized, liability to pay interest would arise from the date of taking of the credit till the date of reversal of the credit. In view of the above decision by the hon'ble apex court, the ratio of which is applicable to the present case, it become....
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.... relation to the manufacture of excisable goods. Arrangements which the appellant had with VCL for the storage of the goods and its return as and when needed was never disclosed to the department. In these circumstances, the invocation of extended period of time for denial of credit is clearly sustainable in law. 5.4 As regards the argument advanced by the appellant that since the expression "CENVAT credit taken or utilized wrongly" had been substituted effective from 17.03.2012 with the words "CENVAT credit taken and utilized wrongly," the same would have retrospective effect and, therefore, in as much as the appellant has not utilized the credit there will not be any liability to interest, this argument is misplaced. Rule 14 of the CENVAT Credit Rules, 2004 was amended by a Notification No.18/2012-CE(N.T.) dated 17.03.2012 and amendments effected in Rule 14 of the CENVAT Credit Rules, 2004 read follows:- "11. In rule 14 of the said rules, with effect from the 17th day of March, 2012,- (a) for the words "taken or utilized wrongly", the words "taken and utilized wrongly" shall be substituted; This amendment rule make it absolute clear that the amendmen....