2017 (4) TMI 217

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed Versus C.C.E. & S.Tax, Surat I ORDER Per Dr. D. M. Misra Appeal at Serial No.1 (E/441/2011) is filed by Revenue and the Appeals at Serial Nos.2 to 12 are filed by the assesses-appellants against respective impugned orders. Since the issues involved in all these appeals are common, these are taken up together for disposal. In Revenue s appeal though the issues of penalty and levy of interest are involved, however, the issue of penalty is no more pending, being decided in favour of assesse by the Honble Gujrat High Court. 2. The facts more or less are similar in all the appeals; the appellants have availed inadmissible CENVAT credit on various grounds but later on being pointed out, reversed the same before utilization or not utilized the same. The Department proposed to recover interest for the period of availing the CENVAT credit, even though the same has not been utilized. 3. Ld. Advocate Shri Jigar Shah has fairly submitted that there are conflicting views of High Courts and Tribunal on the issue. He has submitted that Hon'ble Karnataka High Court in the case of C.C.E., LTU, Bangalore vs. Bill Forge Pvt. Ltd. 2012 (279) ELT 209 (Kar.) after taking into considera....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cation, in view of the principle laid down by the Hon'ble Supreme Court in the case of Zile Singh vs. State of Haryana 2004 (8) SCC 1 and in the case of Government of India vs. Indian Tobacco Association 2005 (187) ELT 162 (SC). 4. Ld. Advocate Shri Willingdon Christian for the appellant M/s Garden Silk Mills Ltd. submitted that this Tribunal taking note of the judgment of the Hon'ble Gujarat High Court in Dynaflex Pvt. Ltd. s case while considering the issue of applicability of interest on wrongly availed credit but reversed before its utilization in the case of Garden Silk Mills Limited 2015 TIOL 2304 CESTAT AHM held in favour of the assessee. He has further submitted that as there is a judgment of the jurisdictional High Court on the same issue, hence, it is to be followed. Ld. Advocate, however, fairly submitted that the earlier decision of the same Bench in the case of Gujarat Guardian Ltd. v.C C.C.E., Surat II 2016 (46) STR 552 (Tri-Ahmd.), on the same issue, which was also decided taking into consideration the principle laid down in Dynaflex Pvt. Ltd. s case was not brought to the notice of the Bench deciding the appeal filed by M/s Garden Silk Mills Ltd. 5. Ld. Advoca....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tted that in a recent case, the Delhi Bench of this Tribunal in Shree Cement Limited vs. C.C.E., Jaipur II 2017 - TIOL 636 CESTAT DEL considering the judgments of various High Courts and the Supreme Court in Ind-Swift Laboratories Ltd s case observed that interest would be payable on the credit wrongly availed even if not utilized. Responding to the argument that the amendment to Rule 14 of CCR,2004 w.e.f 17.3.2012 is clarificatory in nature and retrospective in application, the ld. A.R. for Revenue submitted that Mumbai Bench of Tribunal in the case of Balmer Lawrie & Co Ltd. vs C.C.E., Belapur 2014 (301) ELT 573 (Tri-Mum.) being confronted with the same argument, rejected the said contention observing that no retrospective operation of the said Notification has been provided by the legislature, while introducing the amendment w.e.f. 17.3.2012 by virtue of Notification No.18/2012-CE (NT) dated 17.3.2012, hence, the amendment is effective prospectively. 7. On the issue of limitation, ld. A.R. for Revenue has submitted that since inadmissible CENVAT credit has been availed by suppressing the relevant facts from the knowledge of the Department, accordingly, interest on such irregu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y taken as such availment by itself does not create any liability of payment of excise duty. Therefore, High Court on a conjoint reading of Section 11AB of the Act and Rules 3 & 4 of the Credit Rules proceeded to hold that interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongly utilized. 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 utilized 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 word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we find no reason to read the word OR in between the expressio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ect in law. The Apex Court has held that such an interpretation is totally impermissible. In that view of the matter, the said judgment would be of no assistance to the case of the assessee. 12. Similarly, the Hon'ble Chhattisgarh High Court in the case of Vandana Vidyut Ltd. (supra), following the ratio laid down in Ind-Swift Laboratories Ltd. observed as follows: "9. The aforesaid consideration takes it beyond the ambit of any controversy that under Rule 14, even if the Cenvat credit was taken by making paper entries by one not entitled to the same, the liability for interest arises irrespective of its reversal before utilization. The conclusion of the Tribunal that the Cenvat credit having remained a paper entry only liability for interest would not arise in absence of utilization was thus clearly erroneous." 13. Taking note of all these judgments, recently, the Principal Bench of this Tribunal at Delhi in the case of Shree Cement Ltd. vs. C.C.E., Jaipur II - 2017 TIOL 636 CESTAT DEL observed as follows: "6.2 By following the Hon'ble Supreme Courts decision in case of Ind-Swift Laboratories Ltd. and Hon'ble Chhattisgarh High Courts decision in case of Van....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... a specific ruling by the Apex Court on the issue in the case of UOI v. Ind-Swift Laboratories Ltd. (supra) with respect to Rule 14 of Cenvat Credit Rules, 2004. 15. Also, in recent judgment of Delhi Bench of this Tribunal, after taking into consideration judgments of different High Courts and that of the Supreme Court, held that interest is leviable on the credit availed even if not utilised. Therefore, the observation made by the Tribunal in Hindalco Industries Ltd s case and in Garden Silk Mills Ltd. s case, in my opinion, is per incuriam and hence cannot be considered as binding precedent being contrary to the ratio laid down by various High Courts. 16. Another issue raised by the ld. Advocate is that subsequent amendment brought to Rule 14 of Cenvat Credit Rules, 2004, the expression taken or utilised wrongly has been substituted with taken and utilised wrongly be read as clarificatory in nature and hence retrospective in application. I find that this issue has also been considered by the Mumbai Bench of this Tribunal in Balmer Lawrie & Co . Ltd. 2014 (301) ELT 573 (Tri-Mum.). After considering in detail, this Tribunal at Para 5.4 observed as follows: "5.4 As re....