Custom, Excise & Service Tax Tribunal
M/S. Indo Shell Mould Ltd vs Cce, Coimbatore on 11 March, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI E/S/04/2010 & E/04/2010 (Arising out of Order in Appeal No. 115/2009 dated 24.09.2009, passed by the Commissioner of Customs & Central Excise, (Appeals), Coimbatore ). For approval and signature Honble Dr. CHITTARANJAN SATAPATHY, Technical Member M/s. Indo Shell Mould Ltd. : Appellant Vs. CCE, Coimbatore : Respondent
Appearance Shri M. Saravanan, Consultant, for the appellant Shri T.H. Rao, SDR, for the respondent CORAM Dr. CHITTARANJAN SATAPATHY, Technical Member Date of hearing : 11.03.2010 Date of decision : 11.03.2010 Final ORDER No._____________ Heard both sides. The issue in this case relates to payment of interest in respect of cenvat credit taken but not utilized. The authorities below have held that in view of Rule 14 of the Cenvat Credit Rules, 2004, interest is payable on cenvat credit wrongly taken even if not utilized. They have also placed reliance on the Boards Circular No. 897/17/2009-CX dated 3.9.09.
2. Shri T.H. Rao, Ld. SDR, appearing on behalf of the department supports the impugned order on the basis of the specific wording of the Rule 14, which he points out that, is different from the wording earlier used in Rule 57 I of the Central Excise Rules, 1944.
3. Shri M. Saravanan, Ld. Consultant, appearing for the appellants on the other hand places reliance on the recent decision of the Honble High Court of Punjab & Haryana in the case of Ind-Swift Laboratories Ltd. Vs. UOI reported in 2009 (240) ELT 328 (P&H), which in para-11 thereof holds as under:-
Reliance of respondents on Rule 14 of the Credit Rules that interest under Section 11AB of the Act is payable even if CENVAT credit has been taken. In our view, said clause has to be read down to mean that where CENVAT credit has been taken and utilized wrongly, interest should be payable on the Cenvat credit taken and utilized wrongly. Interest cannot be claimed simply for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. On a cojoint 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 utilized.
4. After hearing both sides and perusal of the cited Circular of the Board and the cited decision of the Honble High Court of Punjab & Haryana, I find that the Boards Circular cited by the department justify recovery of interest on cenvat credit taken wrongly. While doing so, it curiously states that the order of the Honble Supreme Court in the case of CCE, Delhi III Vs. Maruti Udyog Ltd. 2007 (214) ELT A50 (S.C.) is a decision and not a judgment. To my understanding, such a distinction cannot be made and moreover, whether it is a decision or a judgment, when delivered by the Honble Supreme Court, the same has to be respected and followed. In any case, I find that the issue dealt thereunder was in the context of erstwhile Rule 57 I of the Central Excise Rules, 1944, and the order was against the department. Subsequently, we have the benefit of the decision of the Honble High Court of P&H in the case of Ind-Swift Laboratories (supra) in the context of the present Rule 14 of the Cenvat Credit Rules, 2004, which categorically holds that the said rule has to be read down and no interest can be charged in respect of cenvat credit taken but not utilized. Following the ratio of the said decision of the Honble High Court of P&H, I hold that the appellants are not liable to pay interest on the impugned cenvat credit taken but not utilized. Consequently, the impugned order is set aside after waiving the requirement of predeposit and the appeal is allowed.
(Order dictated and pronounced in the open Court) (Dr. CHITTARANJAN SATAPATHY) TECHNICAL MEMBER BB 4