TaxTMI 
TaxTMI 
2025 (8) TMI 1222
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.... was short-paid, he was liable to pay interest from the due date till the date of payment. From the returns filed by the appellant, it was noticed that appellant had short reversed certain credit amounts hence, interest was demanded and the impugned order, accordingly, demanded differential amount of Rs.8,75,04,359/- and also appropriated the amount paid and demanded interest of Rs.52,93,414/- under Rule 6(3A)(e) of the Cenvat Credit Rules, 2004 and also imposed penalty of Rs.5000/- under Rule 15A of the Cenvat Credit Rules, 2004. Aggrieved by this order, the appellant is in appeal before us. 3. The Learned Counsel on behalf of the appellant submitted that as per Rule 14 of the Cenvat Credit Rules, 2004, interest is liable to be paid on wrong availment and utilization of cenvat credit. In the present case, since the appellant had sufficient balance in his credit ledger as is held by the Commissioner at Para 18.3 of the impugned order, the question of payment of interest does not arise. Reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of CCE & ST vs. Bill Forge Pvt. Ltd.: 2012 (26) STR 204 (Kar.) and CCE, Bangalore-II vs. Pearl Insulation Ltd.....
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....of the provisions of sub-rule (2) or sub-rule (3), as the case may be : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder. Explanation 3. - For the purposes of this rule, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a 'service' as defined in section 65B(44) of the Finance Act, 1994 [provided that such activity has used inputs or input services]. Explanation 4. - Va....
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....im or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3. - For the purposes of this sub-rule and sub-rule (3A),- (a) "non-exempted goods removed" means the final products excluding exempted goods manufactured and cleared upto the place of removal; (b) "exempted goods removed" means the exempted goods manufactured and cleared upto the place of removal; (c) "non-exempted services" means the output services excluding exempted services.] [(3A) For determination of amount required to be paid under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely :- (a) the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely :- (i) name, address and registration number of the manuf....
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....otal of - (a) value of exempted services provided; and (b) value of exempted goods removed, during the preceding financial year; where F is the sum total of - (a) value of non-exempted services provided, (b) value of exempted services provided, (c) value of non-exempted goods removed, and (d) value of exempted goods removed, during the preceding financial year : Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible common credit shall be deemed to be fifty per cent. of the common credit; (v) remainder of the common credit shall be called eligible common credit and denoted as G, where,- G = C - D; Explanation.- For the removal of doubts, it is hereby declared that out of the total credit T, which is sum total of A, B, D, and G, the manufacturer or the provider of the output service shall be able to attribute provisionally and retain credit of B and G, namely, eligible credit and eligible common credit and shall provisionally pay the amount of credit of A and D, namely, inel....
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....the amount of Annual ineligible credit and Annual ineligible common credit and the aggregate amount of ineligible credit and ineligible common credit for the period of whole year, namely, [{A(Annual) + D(Annual)} - {(A+D) aggregated for the whole year)}], where the former of the two amounts is greater than the later; (e) where the amount under clause (d) is not paid by the 30th June of the succeeding financial year, the manufacturer of goods or the provider of output service, shall, in addition to the amount of credit so paid under clause (d), be liable to pay on such amount an interest at the rate of fifteen per cent. per annum, from the 30th June of the succeeding financial year till the date of payment of such amount; (f) the manufacturer or the provider of output service, shall at the end of the financial year, take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit and annual ineligible common credit, namely, [{(A+D) aggregated for the whole year)} - {A(Annual) + D(Annual)}], where the former o....
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....nd exempted goods/services. The case laws relied upon by them are also not relevant in the present set of facts. The Hon'ble High Court referring to Rule 14 of the Cenvat Credit Rules 2004, has observed that liability to pay interest does not arise when the entire credit has been reversed before being utilised. But in the instant case we are dealing with a case of ineligible credit and the Rules specifically to avail ineligible credit since segregation at the first instant is not possible and provide reversal of the ineligible credit on or before 30th of June of the succeeding financial year and interest is payable from the stipulated date till the date of reversal. These provisions are entirely different from the provisions laid down in Rule 14 of the Cenvat Credit Rules 2004. Thus, the case laws relied upon by the appellant are not relevant to the present set of facts. 9. The above views are fortified with the observations of the Hon'ble Supreme Court in the case of UOI Vs. Ind-Swift Laboratories Ltd. (supra), wherein the Apex Court has observed as follows: "15. In order to appreciate the findings recorded by the High Court by way of reading down the provision of Rule....
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....ne 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 expressions 'taken' or 'utilized wrongly' or has been erroneously refunded' as the word "AND". On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest. 18. We do not feel that any other harmonious construction is required to be given to the aforesaid expression/provision which is clear and unambiguous as it exists all by itself. So far as Section 11AB is concerned, the same becomes relevant and applicable for the purpose of making recovery of the amount due and payable. Therefore, the High Court erroneously held that interest cannot be claimed from the date of wrong availment of CENVAT credit and that it should only be payable from the date when CENVAT credit is wrongly utilized. Besides, the rule of reading down is in itself a rule of harmonious construction in a different name. It is generally utilized to straighten the crudities or ironing out the creases to make a statute workable. This Court has repeatedly laid down that in the garb of reading down a provision it is not open to read words an....
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....cts, the scheme of the Act, its historical background, the purpose for enacting such a provision, the mischief, if any which existed, which is sought to be eliminated.................................... This principle of reading down, however, will not be available where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanalised or unbridled power." (emphasis supplied)" 19. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows : - "10. ....... In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot....
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....iation of India v. Union of India [(1989) 3 SCC 634], where Justice M.N. Venkatachaliah (as the Learned Chief Justice then was), speaking for the Constitution Bench held : "46. It is now well settled that though taxing laws are not outside Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A legislature does not, as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory. Decisions of this Court on the matter have permitted the legislatures to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. 47....
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....ctional expediency and even otherwise, can pick and choose to tax some. A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the judicature cannot rush in where even the legislature warily treads. All these operational restraints on judicial power must weigh more emphatically where the subject is taxation. Discrimination resulting from fortuitous circumstances arising out of particular situations, in which some of the taxpayers find themselves, is not hit by Article 14 if the legislation, as such, is of general application and does not single them out for harsh treatment. Advantages or disadvantages to individual assessees are accidental and inevitable and are inherent in every taxing statute as it has to draw a line somewhere and some cases necessarily fall on the other side of the line." 11. The Supreme Court in the case of Steel Authority of India Ltd. Versus Commissioner of C. EX., Raipur 2019 (366) E.L.T. 769 (S.C.) dated 8-5-2019 with regard to interest liability held as follows: "63. We are of the view that the reasoning of this Court in the order referring the cases to us (to this Bench) that for the purpose of S....