Case Law Details
Hindustan Petroleum Corporation Ltd Vs Commissioner of Central Excise (CESTAT Mumbai)
CESTAT Mumbai held that in case of premature availment of cenvat credit on capital goods the recovery proceedings under rule 14 of CENVAT Credit Rules, 2004 (CCR, 2004) would not sustain and only interest liability will arise.
Facts- The present appeal is against the order of Commissioner of Central Excise which is confined to resolution on the correctness of demand having been confirmed under rule 14 of CENVAT Credit Rules, 2004 and even after the reversal of credit of ₹ 1,56,461/- that is alleged to have been irregularly availed against invoices dated 3rd September 2010 and 27th May 2010 and the correctness of disallowance of CENVAT credit on capital goods that, instead of being apportioned over two years, was taken in the very first year.
Conclusion- In relation to premature availment of CENVAT Credit, Tribunal in re Sunflag Filaments Ltd that the credit was taken on 9-1-2001 and balance credit would have been available to the appellants in the month of April. Therefore, it was incorrect on the part of the lower authorities to demand the full amount of duty. What should have been demanded was the interest for the period during which irregular credit was available with the appellants.
Nonetheless, owing to premature availment of credit, interest liability may arise in accordance with the decisions cited Furthermore, it is on record that the original authority, while confirming the recoveries proposed in the show cause notice, had also made it a point to note that the reversal of credit has not been verified. Therefore, all that remains in this dispute is ascertainment of the reversal of CENVAT credit as well as computation of interest liability for premature availment of credit on capital goods that were procured. In order to enable this verification, the impugned order merit setting aside for matter to be remanded to the original authority for those limited purposes.
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