TaxTMI 
TaxTMI 
2009 (7) TMI 98
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.... searched factory as well as corporate office of the petitioner. The Directors of the company admitted wrong availment of above-said CENVAT credit. It is the case of the petitioner that a sum of Rs. 4 crores was deposited through 8 TR-6 challan in the month of March, 2006. In November 2006, the petitioner reversed CENVAT amounting to Rs. 1,45,67,660/-. The petitioner also deposited a sum of Rs. 25,79,488/- through RG 23A Pt-II vide entry Nos. 1766, 1767 and 1768 dated 22-2-2006. Thus, total sum of Rs. 5,71,47,148/- was deposited towards wrongly availed CENVAT credit. 3. The petitioner was served with a show cause notice on 8-12-2006 to recover the amount of Rs. 5,66,35,470/- as excise duty and Rs. 5,11,678/- as education cess fraudulently availed by the petitioner under Rule 12 of the CENVAT Credit Rules, 2001-02 and Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 (for short "the Act"). It was also proposed as to why a sum of Rs. 5,71,47,148/- already deposited by the petitioner should not be appropriated against the credit demanded. The show cause notice was also served for imposition of penalty and interest. 4. The petitioner invoked t....
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....ourt in case reported as Commissioner of Central Excise, Mumbai-I v. Bombay Dyeing & Mfg Company Limited, 2007 (215) E.L.T. 3 (S.C.) 2007 (8) SCC 177, to contend that since the assessee is free to reverse the credit before utilization of CENVAT credit and, therefore, liability of payment of tax does not fall on the assessee even if CENVAT credit has been wrongly taken. The availment of credit by itself does not create any liability of payment of any excise duty. The availment of CENVAT credit enables an assessee to off set such credit against the excise duty payable in terms of Rule 3(4) of the CENVAT Credit Rules, 2004 (for short "Credit Rules"). It is further argued that the respondents are not justified in claiming interest on the amount of Rs. 50 lacs till 31-1-2007 when the amount was deposited on 8-3-2006 through treasury challan. 7. The controversy between the parties revolves around the following two issues:- (a) Whether interest is payable from the date CENVAT credit was, admittedly, wrongly availed by the petitioner or interest is payable till the date the duties were actually paid? (b) Whether the deposit of Rs. 50 lacs through TR-6 challan on 8-3-2006 is a valid lead....
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....the CENVAT credit) of- (i) the duly of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act; xx xx xx xx xx (2) and (3) xx xx xx xx (4) The CENVAT credit may be utilized for payment of - (a) any duty of excise on any final product; or (b) to (e) xx &nbs....
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....rds, it is a credit of the duties already leviable or paid. Such credit in respect of duties a ready paid can be adjusted for payment of duties payable under the Act and the Rules framed thereunder. Under Section 11AB of the Act, liability to pay interest arises in respect of any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded from the first day of the month in which the duty ought to have been paid. Interest is leviable if duty of excise has not been levied or paid. Interest can be claimed or levied for the reason that there is delay in the payment of duties. The interest is compensatory in nature as the penalty is chargeable separately. 10. In Pratibha Processors v. Union of India, 1996 (88) E.L.T. 12 (S.C.) = (1996) 11 SCC 101, it was held that interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. It is compensatory and different from penalty which is penal in character. Similarly, in Commissioner of Customs v. J....
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....amount of Rs. 4 crores was deposited, was wrongly averred as till such time PLA account is debited, the amount is not available with the Central Government as such amount cannot be appropriated by the department. 13. Firstly, the factual basis need to be noticed. In Para 14 of show cause notice, it is clearly averred that Rs. 4 crores stand deposited including treasury challan dated 8-3-2006. The said deposit of Rs. 4 crores was noticed by the Settlement Commission in its final order. Even in communication Annexure P-4 dated 31-1-2007, Superintendent Central Excise has communicated that Rs. 4 crores deposited during March, 2006 including through Challan dated 8-3-2006 is yet to be debited with the Government exchequer. It was in pursuance of such communication, the petitioner made a debit entry of Rs. 4 crores in its personal ledger account. 14. The Central Government in the Central Excise Law Manual, Chapter 3 Part V has clarified in clause 3.3 as under:- "3.3 There is an 'Explanation' to sub-rule (1) of rule 5 that the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date. It....