TaxTMI 
TaxTMI 
2023 (11) TMI 467
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered and a penalty of Rs.1,87,69,233/- was imposed on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 2.1 Brief facts of the appeal are as given below:- 2.2 During the Audit of the accounts of the appellant, it was seen that the appellant have availed following wrong / double credits in their CENVAT Accounts: - i. CENVAT credit of duty paid on inputs, was availed twice on one and the same input documents (Annexure A of SCN). The excess CENVAT Credit taken thus is to the tune of Rs.89,75,790/- on 382 input documents. ii. Availed CENVAT credit twice on the same procurement, quoting two different source documents (Annexure B of SCN) on four occasions. While doing so, the appellant cited two different input documents as the basis for the credit. The wrong credit so availed, totally amounted to Rs.75,06,661/- iii. The appellant had also availed CENVAT credit of Rs.3,92,303/- twice, on 14 procurements of inputs citing same source documents with subtle differences having the same SAP reference (Annexure C of SCN). iv. They also availed CENVAT Credit of Rs.16,05,463/- (Annexure....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the date of taking such credit. 3.1 The Ld. Advocate Shri K. Senguttuvan representing the appellant has submitted that interest is only payable when the wrong availment has caused benefit to the appellant or loss of revenue to the Government. Availment of credit twice on the documents was completely unintentional and due to negligence of their employee and the Government did not loose any revenue as they were having enough credit balance in their CENVAT accounts. He has argued that the adjudicating authority's reliance on the Apex Court's decision in the case of Union of India Vs. Ind-Swift Laboratories Ltd. [2011 (265) ELT 3 (SC)] is misplaced and is not applicable to the facts of this appeal. In the case of Ind-Swift Laboratories Ltd., fake invoice credit was involved whereas excess credit availed in the instant case is on account of human error. He has given a table which distinguishes the instant appeal from the case of Ind-Swift Laboratories Ltd. :- # Ind-Swift Laboratories Case Appellant Case 1 Credit based on Fake Invoices Credit availed twice unintentionally on the valid and eligible invoices; 2 Such credits resulted in non-payment of cash t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Supreme Court's decision in the case of Union of India Vs. Ind-Swift Laboratories Ltd. (supra). The Hon'ble Supreme Court has held that while interpreting Rule 14 of the CENVAT Credit Rules, 2004, the attempt of the High Court to read down the provision by way of substituting the word 'or' by an 'And', so as to give relief to the assessee is found to be erroneous and once the CENVAT Credit is taken, as the beneficiary is at liberty to utilize the same immediately or thereafter interest is payable thus setting aside the order passed by the Punjab & Haryana High Court. 5. Heard both sides and carefully considered all the evidences available in the appeal. The following two issues arise for decision in this appeal:- i. Whether interest is demandable on irregular CENVAT Credit availed but not utilized? ii. Whether invocation of extended period of time and imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 is justified? 6. We find that there is another issue relating to availment of capital goods credit on ineligible goods. The appellant has availed input tax credit on Factory Lighting ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....veries. A reading of the aforesaid provisions makes it very clear that the said provision is attracted where the Cenvat Credit has been taken or utilized 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 utilised 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. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it amounts to taking the benefit of Cenvat credit. Therefore interest is payable from that date, though, in fact by such entry the Revenue is not put to any loss at all. When 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 as 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 had taken the credit, in other words by 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T-Del] iv. M/s. Gurmehar Construction Vs. Commissioner of Central Excise [2014-TIOL-1205- CESTAT-Del] 7.1.7 Appreciating the ratio of above decisions, we find that the recovery of interest is not legally justified and not maintainable. Whether the extended period is invokable and imposition of penalty sustainable? 7.2.1 It is on record that the appellant has reversed the entire CENVAT Credit wrongly taken or irregularly availed on being pointed out as a result of the Audit of its accounts. The appellant has not only reversed the credit irregularly availed, but also applicable interest. It is not disputed that they were having enough credit balance in their accounts and they have not utilized such irregularly availed CENVAT Credit toward payment of any duty. We find that the Show Cause Notice was issued on 17.06.2013 but the credit reversal was done on 31.08.2012 and 15.09.2012 which is much before the issuance of the Show Cause Notice. The availment of double credit or irregular credit was reportedly caused by the mischief of one of the employees of the appellant against whom they have taken disciplinary action by terminating his services. The appellant has conten....