CX - Interest is chargeable on Credit wrongly availed but not utilized up to 31.03.2012 - no apparent mistake which can be rectified: CESTAT
By TIOL News Service
MUMBAI, AUG 14, 2018: WE had reported the CESTAT, Mumbai order dated 17.11.2017 - 2018-TIOL-994-CESTAT-MUM in this case thus –
CX - CENVAT - On pointing out that the appellant had availed ineligible CENVAT credit on inputs, capital goods and input services, they reversed credit but did not pay any interest - SCN issued and demand confirmed along with penalty and interest - In appeal to CESTAT, appellant submits that the credit was not wrongly availed but due to change over of management as the credit was availed by the earlier company which was amalgamated with company of the present appellant by High Court order, records were not traceable and for this reason appellant admittedly reversed the credit without raising any dispute, therefore there is no wrong availment of credit hence there is no malafide intention; that the credit so taken was lying unutilized and, therefore, no penalty and interest are chargeable.
Held: It is not a case of wrong availment of credit but is due to amalgamation of old company to present company and records were not traceable - Appellant have admittedly reversed the credit, moreover credit so taken was not utilized, therefore, in fact of the present case, there is no reason to impose penalty under Section 11AC; penalty under Section 11AC is set aside - As regard the demand of interest, Bench finds that prior to 01.04.2012 according to unamended Rule 14, interest was chargeable even if the credit was not utilized, which was held by Supreme Court in case of Ind-Swift - 2011-TIOL-21-SC-CX, therefore, interest is chargeable on the Cenvat credit availed up to the period of 31.03.2012 - jurisdictional High Court judgment in GL & V India Pvt Ltd. - 2015-TIOL-1210-HC-MUM-CX shall prevail - after 01.04.2012, interest would not be chargeable when the credit was not utilized - interest from 01.04.2012 is set aside - Appeal is partly allowed: CESTAT [para 5]
Inter alia , the Bench had held that although the CENVAT credit that was taken wrongly was not utilized, the appellant was liable to pay interest till the date of 31.03.2012 since prior to 01.04.2012, according to un-amended Rule 14, interest was chargeable even if the credit was not utilized. In short, the Bench had while setting aside the penalty imposed u/s 11AC held the assessee not liable to pay interest w.e.f 01.04.2012.
Incidentally, we had in the footnote to the order, as Editor's comment, mentioned that the rule 14 of the CCR, 2004 was amended by notification 18/2012-CX(NT) dated 17.03.2012 w.e.f 17.03.2012 and not w.e.f 01.04.2012.
It needs to be noted that rule 1(2) of CENVAT Credit (Third Amendment) Rules, 2012 stated the following -
Save as otherwise provided in these rules, they shall come into force on the 1st day of April, 2012.
And the amending rule 11 read thus –
11. In rule 14 of the said rules, with effect from the 17th day of March, 2012 ,-
(a) for the words "taken or utilised wrongly", the words "taken and utilised wrongly" shall be substituted;
(b) for the word, figures and letters "and 11AB", the word, figures and letters "and 11AA" shall be substituted.
Apparently, on this ground, the appellant filed a Miscellaneous application seeking rectification of mistake in the order no. A/91138-91141/2017 dated 17.11.2017 - 2018-TIOL-994-CESTAT-MUM.
The matter was heard recently.
And the Single Member Bench held -
"3. On perusal of the impugned order, I find that considering the date of effect of CENVAT Credit (Third Amendment) rules, 2012, formulated under Notification 18/2012-CE(NT) dated 17.03.2012, the Tribunal has held that interest is chargeable on CENVAT Credit availed up to the period of 31.03.2012. Thus, there is no apparent mistake in the said order, which can be rectified through the miscellaneous application."
Concluding that there is no merit in the ROM application filed, the same was dismissed.
In passing: Next stop…another ROM or further appeal?
(See 2018-TIOL-2510-CESTAT-MUM)
