2016 (5) TMI 381

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....en but was reversed before utilization, interest was not payable under Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter referred to as 'the Rules') as the Cenvat credit remained a paper entry only in absence of its utilisation. 2. While issuing notice on 15-4-2015, the following question of law had been framed :- "If Cenvat Credit was availed as input for non-excisable goods and reversed only after show cause notice was issued, is interest liable to be paid under Rule 14 of the Cenvat Credit Rules on the subsequently reversed credit." 3. We have heard Counsel for the parties at length and are satisfied that the question of law as framed above can be answered at this stage itself. The appeal is not required to be admitted ....

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....d been taken and utilised wrongly and refund was made after it was questioned by the authorities. In any event, interest is compensatory in nature and the liability will arise when the tax is due but is not paid as held in 1996 (88) E.L.T. 12 (S.C.) [Pratibha Processors v. Union of India]. 6. Having considered the submissions on behalf of the parties and the question of law framed, it is first considered appropriate to set out Rule 14 in its entirety: "RULE 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. - Where the Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the ....

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.... interest was to be paid on the happening of either of the three events. We consider it appropriate to set out the discussion in this regard as follows :- "17..... In our considered opinion, the High Court misread and misinterpreted the aforesaid Rule 14 and wrongly read it down without properly appreciating the scope and limitation thereof. A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provides that where Cenvat credit has been taken or utilised wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid ....