Mere Availment of CENVAT Credit without Utilisation will Attract Interest at an Appropriate Rate: CESTAT [Read Order]
![Mere Availment of CENVAT Credit without Utilisation will Attract Interest at an Appropriate Rate: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/04/Mere-Availment-of-CENVAT-Credit-Availment-of-CENVAT-Credit-Availment-of-CENVAT-Credit-without-Utilisation-Attract-Interest-CESTAT-Customs-Excise-Service-Tax-Taxscan.jpg "Mere Availment of CENVAT Credit without Utilisation will Attract Interest at an Appropriate Rate: CESTAT [Read Order]")
The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), held that mere availment of CENVAT Credit without its utilisation will attract interest at an appropriate rate. The appellants, Deep Industries Ltd., erroneously availed 50% of CENVAT credit of excise duty in the year 2009-10. A Show Cause Notice was issued for recovery of interest and for the imposition...
The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), held that mere availment of CENVAT Credit without its utilisation will attract interest at an appropriate rate.
The appellants, Deep Industries Ltd., erroneously availed 50% of CENVAT credit of excise duty in the year 2009-10. A Show Cause Notice was issued for recovery of interest and for the imposition of penalty.
The Adjudicating authority dropped the demand for interest since the wrongly availed CENVAT Credit had not been utilised. The CST – Service Tax Department filed for appeal with Commissioner (Appeals), who allowed it, making the appellant liable to pay the interest.
The counsel for the appellant contended there must be an exemption from paying the wrongly availed CENVAT Credit since it had not been utilised by the appellant and was always available in their books of accounts.
The counsel for the respondent strongly refuted the contentions raised by the appellant and submitted that the CBEC through a circular had clarified that interest shall be recoverable when the credit has been wrongly taken even if it has not been utilized, in terms of the wording of Rule 14 of CENVAT Credit Rules, 2004.
The Tribunal in Balmer Lawrie & Co. Ltd. had observed that the amendment to Rule 14 of CENVAT Credit Rules 2004, substituting “CENVAT credit taken or utilized wrongly” with “CENVAT credit taken and utilized wrongly”, has a prospective effect and cannot be applied to cases before 17th March 2012.
The bench comprising of two members, Ramesh Nair (Judicial Member) and Mr Raju (Technical Member), observed that the appellants are liable to pay interest for the unutilized CENVAT Credit since the incident was prior to the amendment. At present interest needs to be paid for wrongly availed CENVAT Credit only if it has been utilised and it needn’t be paid if the wrongly availed CENVAT Credit has not been utilised.
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