TaxTMI 
TaxTMI 
2016 (11) TMI 1457
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the duplicate copy of Bill of Entry and could not produce original of duplicate copy of Bill of Entry. It is the case of the appellant that the importer M/s. R.A. Agencies imported two items vide Bill of Entry No.873513 out of which, one item was sold to the appellants and the other item to another manufacturer M/s. Shiva Polyplast Pvt. Ltd., Kanpur and the importer delivered the original copy of the duplicate copy of the said Bill of Entry to M/s. Shiva Polyplast Pvt. Ltd. who issued a Certificate to the appellants to the effect that the original copy of the duplicate copy of the aforesaid Bill of Entry is in their possession and they have not availed credit in respect of the item, sold to the appellants covered under the same Bill of Entry. In the impugned order the lower appellate authority has observed as under :- "In respect of this issue, I find that the Appellant has been able to file only a photocopy of the Duplicate copy. This cannot be accepted. It is simply impossible for the department to keep track of each and every transaction of lakhs of Assessee's. Certain guidelines and safeguards have been prescribed for general compliance to keep the system in place. If we st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entity having no expertise they took Cenvat credit of Basic Customs Duty and Education Cess on customs duty paid on the imported capital goods amounting to Rs. 5,57,970.10. It is also the case of the respondent assessee that though the credit has been taken, but it was never utilized for discharging their duty liability or otherwise till the date of reversal thereof. The lower appellate authority vide the impugned order has held as under:- "I have examined this issue and the submissions. It is evident from the Show Cause Notice itself that though the Appellant availed the credit, it was not utilized by them. On this aspect Hon'ble CESTAT has passed innumerable decisions, referred to supra. In the light of these decisions, neither penalty nor interest can be levied. Hence the Appeal is allowed on this issue." 6. Appellant Revenue is in appeal against this part of the order. 7. Heard both sides and perused the case records. 8. It is the case of the appellant Revenue that the respondent assessee is liable to pay interest on Cenvat credit taken irregularly even though the same was not availed by them in terms of rule 14 of Cenvat Credit Rules, 2004. 9. I find that that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lized wrongly or has been erroneously refunded. In view of the aforesaid judgment of the Apex Court, the question of reading the word and in place of or would not arise. It is also to be noticed that in the aforesaid Rule, the word avail is not used. The words used are taken or utilized wrongly. Further the said provision makes it clear that the interest shall be recovered in terms of Section 11A and 11B of the Act. 20. From the aforesaid discussion what emerges is that the credit of excise duty in the register maintained for the said purpose is only a book entry. It might be utilized later for payment of excise duty on the excisable product. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. It matures when the excisable product is received from the factory and the stage for payment of excise duty is reached. Actually, the credit is taken, at the time of the removal of the excisable product. It is in the nature of a set off or an adjustment. The assessee use the credit to make payment of excise duty on excisable product. Instead of paying excise duty, the cenvat credit is utilized, thereby it is adjusted or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n once the wrong entry was pointed out, being convinced, the assessee has promptly reversed the entry. In other words, he did not take the advantage of wrong entry. He did not take the Cenvat credit or utilized the Cenvat credit. It is in those circumstances the Tribunal was justified in holding that when the assessee has not taken the benefit of the Cenvat credit; there is no liability to pay interest. Before it can be taken, it had been reversed. In other words, once the entry was reversed, it is ad if that the Cenvat credit was not available. Therefore, the said judgment of the Apex Court has no application to the facts of this case. It is only when the assessee has taken the credit, in other words y taking such credit, if he had not paid the duty which is legally due to the Government; the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date if became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to not taking credit. Once the credit is reversed before its utilization in the Cenvat account it does not amount to taking of credit. Thus, the provisions of Rule 14 of Cenvat Credit Rules and Section 11AB of the Act are not attracted and neither the penalty nor the interest is chargeable. The Division Bench of Punjab & Haryana High Court in the case of Commissioner of Central Excise, Delhi-III v. Maruti Udyog Limited, reported in 2007 (214) E.L.T. 173 (P & H) has held that the Assessee is not liable to pay interest as the credit was only taken as an entry in the Modvat record and was not in fact utilized. Against the above decision of the Punjab & Haryana High Court, Special Leave to Appeal (Civil) No.CC3915/2007 filed by Commissioner of Central Excise, Delhi-III has been rejected by the Apex Court on 14-5-2007 [2007 (214) E.L.T. A50 (S.C.)]." (Emphasis added) (iii) In case of CC & CE Vs. Rana Sugar Ltd. [2010 (253) E.L.T. 366 (All.)] Hon'ble Allahabad High Court had the occasion to consider the following question raised by the Revenue: "Whether the interest in not recoverable under Rule 14 of the CENVAT Credit Rules, 2004 and penalty not imposable under Rule 15(I) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was only taken as an entry in the Modvat record and was not in fact utilized. Against the decision, the Special leave to Appeal (Civil) No.CC3915/2007 filed by Revenue, was rejected by the Hon'ble Apex Court [2007 (214) E. L. T. A50 (S.C.)]. (viii) The Hon'ble Madras High Court in case of CCE Vs. M/s Strategic Engineering (P) Ltd. [2014-TIOL-466-HC-MAD-CX] and Para 11 of the decision is worth quoting, which is extract below: "11. It is an admitted fact that Rule 14 of the Cenvat Credit Rules has been subsequently amended wherein it has been clearly stated as "taken and utilized". Therefore it is quite clear the mere taking itself would not compel the assessee to pay interest as well as penalty. Further, as pointed out earlier, the subsequent amendment has given befitting answer to all doubts existed earlier. Since the subsequent amendment has cleared all doubts existed earlier in respect of Rule 14 of the said Rules, it is needless to say that the argument advanced by the learned counsel appearing for the appellant/Department is erroneous, whereas the argument advanced on the side of the respondent is really having merit and the substantial questions of law settled in t....