Case Law Details
M/s Flextronics Technologies (India) Pvt. Ltd. Vs. Commissioner of Central Excise (CESTAT Bangalore)- On a conjoint reading of Section 11AB of the Act and that of Rules 3 and 4 of the Credit Rules, we hold that interest cannot be claimed from the date of wrong availment of CENVAT credit. The interest shall be payable from the date CENVAT credit is wrongly utilised.
The appellants had not utilised the Cenvat credit taken by it erroneously. When the Cenvat credit taken remained an entry in their account, the assessee did not incur any liability on account of such credit. Interest is compensatory in character and is imposed on an assessee when payment of any tax due and payable is withheld.
Please Note This Judgement has no Significance now as Supreme Court has held in the case of Union of India & Ors. Vs. M/s. Ind-Swift Laboratories Ltd. Civil Appeal No. 1976 of 2011, decided on 21-2-2011 that interest in case of wrong availment of cenvat credit has to be paid from the date of availment of credit and not from the date of utilisation.
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IN THE, CUSTOMS, EXCISE & SERVICE TAX
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A unit has availed and utilized 100% Cenvat Credit on Capital goods. When it came to it’s notice, it has reversed the Cenvat credit by himself before issuance of Show Cause Notice or before pointing out by the Department. The unit has also paid interest at the appropriate rate from the date of availment of Cenvat Credit. Whether he is liable for Penalty for wrong availment and utilization of Excess 50% Cenvat Credit.
The correct position of law as it stands today is
IND-SWIFT LABORATORIES LTD. (2011 (265) E.L.T. 3 (S.C.) )
Interest on irregular cenvat credit arises from date of availing such credit and not from the date of utilization . Rule 14 of Cenvat Credit Rules, 2004 specifically provides for interest when Cenvat credit taken OR utilized wrongly OR erroneously refunded hence interest on irregular credit arises from date of taking such credit i.e. on happening of any of the three specified circumstances. i.e. a) Taken, or 2) Utilized, or 3) Erroneously refunded.
Insted of creating further confusion this judgement may be withdrwan and if you wish you can publish the latest SC Judgement which I am mailing you seperately.
CA Lalit Munoyat
it is not clear why this Order dt: 20/07/2010 is appearing in the link today viz. 08.09.2011. subsequently there have been devolopments contrary to the above decision
the issue has now been conclusively settled by the Apex Court in the departmental appeal. The Apex Court vide its judgement dated 21.02.11 has upheld the view taken by the Board in circular dated 03.09.09, that that interest is payable on mere taking of Cenvat credit.
purpose of citing a one year old order which has outlived time is not clear.
Sir, This is an old judgement. Recently the higher authorities have decided that the interest is payable from the date of wrong availment of cenvat credit even if it is not utilised.