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2013 (8) TMI 28 - AT - Central ExciseStay - Interest under Rule 14 of the Cenvat Credit Rules, 2004 of cenvat credit and reversal of the same on their own as ineligible Held that - Rule 14 as has been substituted by new Rule 14 which talks about cenvat credit has been taken and utilised - Appellant has not utilised the cenvat credit Also, as per judgment of the Hon ble High Court of Gujarat in the case of Dynaflex Pvt. Ltd. 2010 (12) TMI 389 - GUJARAT HIGH COURT , has specifically held that if the credit is taken but not utilised, interest liability does not arise - Issue needs to be gone into detail. Limitation Waiver of pre-deposit Held that - Show cause notice has been issued on 28.07.11 demanding interest from the appellant for the cenvat credit reversed by them during the period 2006-07 and 2009-10 - Show cause notice does not invoke any suppression or mis-statement on the part of the appellant and hence for demand of interest also, the extended period needs to be considered - Appellant has made out a case for the waiver of the pre-deposit Stay granted.
Issues involved:
Confirmation of demand of interest on the appellant for availing cenvat credit and not discharging interest liability under Rule 14 of the Cenvat Credit Rules, 2004. Analysis: The judgment pertains to a stay petition filed for the waiver of pre-deposit of interest demanded and confirmed by the adjudicating authority along with penalty. The issue involved is the confirmation of demand of interest on the appellant due to their availing of cenvat credit and not discharging the interest liability as per Rule 14 of the Cenvat Credit Rules, 2004. The adjudicating authority found the appellant liable to pay interest under Rule 14, as even though they reversed the cenvat credit as ineligible, they did not discharge the interest liability, citing the decision of the Apex Court in the case of Ind Swift Laboratories. The appellant's counsel argued that the new Rule 14 pertains to cenvat credit "taken and utilized," emphasizing that the appellant did not utilize the credit. Referring to a letter addressed by the appellant to the jurisdictional superintendent of Central Excise, the counsel highlighted that the appellant had reversed an amount as interest where they had utilized the credit. The counsel also relied on the judgment of the Hon'ble High Court of Gujarat in the case of Dynaflex Pvt. Ltd., which held that interest liability does not arise if the credit is taken but not utilized. Additionally, the counsel argued that once provisions are substituted, they should be read as if they were in the statute from the beginning. The Departmental Representative contended that even though the appellant reversed the ineligible cenvat credit, they did not pay the interest, and the Apex Court's interpretation of Rule 14 indicates that interest liability arises if the credit is taken, regardless of utilization. The Tribunal, after considering the submissions, found that the issue needed detailed consideration on merits and limitation. Regarding merits, the Tribunal noted the argument that the substituted Rule 14 does not give rise to interest liability, and on the question of limitation, it observed that the show cause notice did not invoke suppression or misstatement by the appellant. Citing precedent, the Tribunal held that the extended period needs to be considered for demanding interest. Considering the limitation aspect in favor of the assessee and the deposit made during the pendency, the Tribunal allowed the waiver of pre-deposit of the balance amounts of interest and penalty, staying the recovery until the appeal's disposal.
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