Case Law Details
Deep Industries Limited Vs C.S.T. Service Tax (CESTAT Ahmedabad)
The limited question needs to be answered in this matter is whether interest on the amount of Cenvat credit availed but not utilized is recoverable or otherwise. The recovery of interest on the inadmissible Cenvat credit has been directed under Rule14 of the Cenvat Credit Rules, 2004 which at the relevant time reads as under :
“Rule 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. — Where the Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.”
The aforesaid rule has been interpreted by the Hon’ble Supreme Court in the case of Indo-Swift Laboratories Ltd. 2011(265)ELT 3(S.C.). We find that the Hon’ble Supreme Court in the case of Union of India Ind-Swift Laboratories Ltd. (supra), has interpreted the unamendedRule14 which was applicable to the appellant during the financial years in question and, has categorically held that a bare reading of such rule would clearly indicate that the manufacturer or the provider of the output service becomes liable to pay interest, along with the dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded. The Hon’ble Supreme Court, accordingly, held that if the said Rule14 is read as a whole, the Hon’ble Supreme Court did not find any reason to read the word „or‟ in between the expressions „taken‟ or „utilized wrongly‟ or „has been erroneously refunded‟ as the word „and‟. It is held that on the happening of any of the three circumstances, such credit becomes recoverable along with interest. In our view, the submission of the Learned Counsel for the Appellant that since the Appellant had not utilized the Cenvat credit and thus Rule 14 of the Cenvat Credit Rules was not attracted, is ex facie contrary to the principles of law laid down by the Hon’ble Supreme Court in the case of Union of India v. Ind-Swift Laboratories Ltd. (supra).
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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