TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1991
X X X X Extracts X X X X
X X X X Extracts X X X X
....nputs/ input services; credit availed on Light Diesel Oil; excess credit availed; credit taken twice on same invoices and credit availed on Housekeeping and testing of drinking water services etc. SAIL [Appellant 1] realized the bona fide mistake and promptly reversed the CENVAT credit, alleged to be availed irregularly and reflected the same in the ER-1 Return filed for the month of August 2015 and September 2015. The details were intimated to the Department vide letter dated 15.10.2015. [Annexure 2 at pg no. 77 to 98 of Appeal-1] 2. A show-cause notice was issued vide letter dated 04.11.2015 proposing to recover CENVAT credit of Rs. 3,14,13,554/- along with interest and equivalent penalty and appropriation of the CENVAT credit already reversed by the Appellant-1. Further, personal penalty of Rs. 50,000/- and Rs. 10,000/- was also imposed on Appellant-2 and 3. The Adjudicating authority after following due process of law, confirmed the demand along with interest and imposed penalty on all the three appellants. Being aggrieved, the appellants are before the Tribunal. 3. The Ld Counsel appearing for the appellants makes the following submissions : 3.1 It is submitted that&n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interpret the provision prevailing during the relevant period. 3.6 Without prejudice to the above, it is humbly submitted that even when the word 'or' was in place, prior to 17.03.2012, even then it has been held in a catena of judgments that interest liability shall arise only the CENVAT credit has been taken as well as utilized. Reliance in this regard is placed on the following judgments: * CCE & ST, LTU, Bangalore v. M/s. Bill Forge Pvt. Ltd. - 2012 (279) E.L.T. 209 (Kar.) * Philips Carbon Black Ltd. v. CCE., Bolpur 2018 (12) TMI 853 CESTAT Kolkata * J.K. Tyre & Industries Ltd. Versus Asst. Commr. Of C. Ex., Mysore [2016 (340) E.L.T. 193 (Tri. - LB)]. 3.7 It is humbly submitted that penalty has been confirmed upon the Appellant-1 by invoking Rule 15(2) of the CCR read with Section 11AC of the Central Excise Act, 1944 ('CEA'). Penalty under the said provisions is imposable only when the elements of fraud, suppression, etc. are proved against the Appellant-1. In this regard, it is humbly submitted that the availment of CENVAT credit by the Appellant-1 was duly disclosed in the returns filed and there was no requirement to disclose invoice wise details of the tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alore [2014 (314) E.L.T. 664 (Tri. - Bang.)] affirmed by Commr. Of C. Ex., Bangalore vs Flextronics Technologies (I) P. Ltd. [2015 (323) E.L.T. 273 (Kar.)]. 3.10 Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 is also not justified as the amount of demand along with applicable interest stands deposited prior to issuance of SCN. Moreover, the penalty confirmed upon Appellant-2 & Appellant-3 is also unsustainable as there is no mens rea on their part as evident from the submissions made above. 4. The Ld AR appearing for the Revenue submits that the appellant has taken the credit knowing fully well that they are not entitled to take the credit. Only due the enquiry and investigation, they could detect the irregular cenvat credit taken by the appellant. Therefore, it is factually proved that the irregularity has come to light only because of investigation. Hence, he justifies the charging of interest and imposing of the penalty on SAIL. He submits the other two appellants were looking after the day to day activities and were responsible for taking and utilization of the cenvat credit. Therefore, he submits that the penalties imposed on them is justified. 5. He....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pply mutatis mutandis for effecting such recoveries." Notification No. 06/2015-Central Excise (N.T.), Dated: March 1, 2015 (With effect from 1.3.2015) 14. Recovery of CENVAT credit wrongly taken or erroneously refunded. - (1) (i) Where the CENVAT credit has been taken wrongly but not utilised, the same shall be recovered from the manufacturer or the provider of output service, as the case may be, and the provisions of section 11A of the Excise Act or section 73 of the Finance Act, 1994 (32 of 1994), as the case may be, shall apply mutatis mutandis for effecting such recoveries; (ii) Where the CENVAT credit has been taken and utilised wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer or the provider of output service, as the case may be, and the provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, 1994, as the case may be, shall apply mutatis mutandis for effecting such recoveries. 9. A careful reading of these provisions would clarify that while prior to 17.03.2012, just taking of the Cenvat Credit, whether or not utilized, would be liable to be rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... By such late payment or delayed payment, the Revenue is deprived of the duty. The said amount would be in possession of the assessee who would have the benefit of the said amount. It is to compensate the loss sustained by the Revenue, the interest is imposed, i.e., interest is payable for the period during which the Revenue is deprived of the duty, which it was legitimately entitled to and as the assessee had the benefit of the duty by not paying the duty payable on the due date. In other words it is compensatory in character, and is imposed on the assessee who has withheld payment of any tax as and when it is due and payable. 17. As is clear from the aforesaid judgments, the Apex Court in the case of Union of India v. M/s. Ind-Swift Laboratories Ltd., was essentially concerned with the interpretation placed by the Punjab and Haryana High Court where it had held that Rule 14 of the Cenvat Credit Rules, 2004 had to be read down to mean that where Cenvat credit has been taken or utilized wrongly interest should be payable on the Cenvat credit from the date the said credit had been utilized wrongly and that interest cannot be claimed simply for the reason that Cenvat credit has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n and not from the date of availment. Therefore, an application was filed for clarification by the assessee. The said application was rejected upholding the earlier order, i.e., interest is payable from the date of duty becoming payable as per Section 11AB. Therefore the Apex Court interfered with the judgment of the Punjab and Haryana High Court and rightly rejected by the Settlement Commission as outside the scope and they found fault with the interpretation placed on Rule 14. 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. The assessee uses the credit to make payment of excise duty on excisable product. Instead of paying excise duty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....try 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 on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability t....