M/s. Hindustan Petroleum Corporation Ltd. Versus Commissioner of CGST, Kolkata (North)
Central Excise
2018 (12) TMI 163 – CESTAT KOLKATA – TMI
CESTAT KOLKATA – AT
Dated:- 19-11-2018
Appeal No. E/78022/2018 – FO/76969/2018
Central Excise
Shri P.K. Choudhary, Member (Judicial)
Shri Madhusudan Lila, Manager for the Appellant (s)
Shri A.K. Biswas, Suptd.(AR) the Respondent (s)
ORDER
Per Shri P.K. Choudhary
This appeal is listed for admission today. After hearing both sides and despite the amount involved in this case being less than Rs. 2.00 lakhs, the appellant intends to contest the issue on merit, which is admitted and since the issue lies in a narrow compass, with the consent of both sides the same is taken up for disposal.
2. The only dispute in this appeal is regarding the demand of Rs. 47,544/-, demanded on account of interest in terms of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of Central Excise Act, 1944.
4. Ld. Representative app
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the Board's Circular dated 03.09.2009 observed that interest is payable even when credit has not been utilized. I find that the Larger Bench of the Tribunal in the case of J.K. Tyre & Industries Ltd. v. Asst. Commr. of C.Ex., Mysore [2016 (340) E.L.T. 393 (Tri.-LB)] held that wrong availment of Cenvat Credit, interest is not payable, if reversed before utilization. The Tribunal in the case of Garden Silk Mills Ltd. v. Commissioners of Central Excise, Customs & Service Tax- Surat-I [2015 SCC Online CESTAT 2361] on the identical issue held in favour of the assessee. The relevant portion of the said decision is reproduced below:-
“4. The learned Authorised Representative for the Revenue strongly refutes the arguments of the learned Counsel and submits that the appellants had reversed the Credit only after the audit pointed out the same and after persuasion by the officers. He also submits that on the issue of interest, there are other decisions by the Hon'ble High Court of Madras and als
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t of the said Cenvat Credit by any other unit. It is also observed that the appellants had reversed the Cenvat Credit on being pointed out by the audit. The appellants have not seriously contested the necessity or correctness of reversal of the Cenvat Credit before the lower authorities. However, they are seriously contesting the levy of interest and penalty. On the issue of levy of interest, there are conflicting decisions by various Hon'ble High Courts and different Benches of the Hon'ble Tribunal. It is seen that the Hon'ble High Court of Gujarat has observed in Para 7 in the case of Dynaflex Pvt. Ltd. (supra), as under :
“7. In this regard it may be germane to refer to the decision of the Apex Court in the case of Commissioner of C. Ex., Mumbai-I v. Bombay Dyeing & Mfg. Co. Ltd., 2007 (215) E.L.T. 3 (S.C.), wherein it has held been that when an entry has been reversed before utilization the same amounts to not taking credit. Rule 14 of the Rules makes provision for recovery of i
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ill the time of reversal of the same. Therefore, the decision of Hon'ble Jurisdictional High Court, relying upon the decision of the Hon'ble Supreme Court on the very same issue is applicable in this case. We, therefore, hold that no interest is payable in the present case. On the issue of penalty under Section 11AC, it is seen that the same is not leviable as there were no intention to evade duty, as is evident from the facts of the case.
7. In the light of the above analysis, we set aside the demand of interest under the provisions of Rule 14 of Cenvat Credit Rules 2004, and penalty under Section 11AC of Central Excise Act 1944. Order-in-Original is upheld with the above modifications. The appeal is allowed on these terms.”
6. Hence, the demand of interest on unutilised Cenvat Credit, cannot be sustained.
7. In view of the above discussion, and as per the submission made by the ld. Representative of the appellant company, the impugned order is modified to the extent, the demand
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