Relief to Vodafone, CESTAT rules Unutilized CENVAT credit does not Incur Interest Liability [Read Order] 

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal  (CESTAT) has granted relief to Vodafone by ruling that  the unutilized CENVAT credit would not incur the interest liability.

The appellant, Vodafone Essar East Limited received certain services from Indus Towers Ltd. and at the time of payment of advance, they haD taken cenvat credit on the advance payment. Later on, invoices were raised to the appellant and on the whole of the invoice, the appellant took cenvat credit.

Thereafter, realising that the appellant had taken excess cenvat credit on the advance paid by them, they adjusted the advance availment of cenvat credit with availment of another cenvat credit available to the appellant. The revenue was of the view that the appellant had taken cenvat credit twice and had not produced any proof or evidence that they had reversed the cenvat credit taken inadvertently, therefore, the impugned order had been passed.

Payal Bharwani, appearing on behalf of the appellant S.S.Chattopadhyay, appeared on behalf of the revenue.

A Single Bench of Ashok Jindal, (Judicial Member) noted that it was a fact on record that the appellant had taken cenvat credit on advance payment made by them and the cenvat credit was also taken on full amount raised by the service provider, but later on the appellant had availed less cenvat credit on the amount equivalent to the amount of cenvat credit pertaining to the advance paid by them. As this fact had not been disputed by either of the sides, it was concluded that the appellant had reversed the excess cenvat credit and were not liable to reverse the cenvat credit again.

Further, the Bench found that there was ample cenvat credit lying in the cenvat credit account, therefore, no payment of interest was required to be made by the appellant in the light of the decision of Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, LTU, Bangalore v. Bill Forge Private Limited which held that, Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.” 

The Bench set aside the impugned order, holding that no penalty was imposable on the appellant.

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