2010 (9) TMI 443 - AT - Central Excise

Interest Cenvat credit goods sent for job work but not received within 180 days reversal of credit on expiry of 180 days - Rule 14 as is seen provides for recovery of interest by application of provisions of Section 11A and Section 11AB of Central Excise Act in cases where Cenvat Credit has been taken or utilized wrongly or has been erroneously refunded - availment of credit was in accordance with law neither the same was erroneously refunded to the assessee - it is not clear in the present case as to whether the credit required to be reversed by the assessee was in fact utilized by him for payment of duty on their final products cleared in the meanwhile or the same continued to remain in the Cenvat account books order set aside and matter remanded back to adjudicating authority

Summary

Issues:
1. Availing Cenvat Credit for goods sent for job work beyond the stipulated period.
2. Dispute regarding payment of interest on delayed reversal of Cenvat Credit.

Analysis:
1. The appellants, engaged in manufacturing stainless steel tubes/pipes, availed Cenvat Credit and sent goods for job work as per Rule 4(5)(a) of Cenvat Credit Rules, 2004. The rule mandates receiving the goods back within 180 days, failing which the availed credit must be reversed. The appellants failed to receive the goods back within the stipulated period, leading to a directive to pay back the availed Cenvat Credit. The dispute primarily revolves around the interest charged on the delayed reversal of the credit, amounting to Rs. 29,924.

2. The key contention arises from whether interest is applicable on the delayed reversal of Cenvat Credit post the 180-day period. Rule 4(5)(a) does not explicitly mention interest or consequences for non-reversal post the deadline. The lower authorities invoked Rule 14 of Cenvat Credit Rules, 2004, for charging interest. Rule 14 allows for recovery of interest in cases of wrongly utilized credit. In this scenario, if the credit remains unutilized in the account books, interest may not apply as per established legal precedents.

3. Rule 14 empowers the recovery of interest akin to the provisions of the Central Excise Act in cases of erroneous credit utilization. The judgment emphasizes that if the credit was not utilized for duty payment on final products, the question of interest imposition may not arise. As the factual clarity regarding credit utilization is lacking, the impugned order is set aside for reassessment by the adjudicating authority. The matter is remanded for a thorough examination of the factual position to determine the necessity of interest payment on the delayed reversal of Cenvat Credit.

4. The judgment, delivered on7-9-2010, allows the appeal by remanding the case to the original authority for a detailed review and decision on the interest issue. The decision underscores the importance of factual verification in determining the applicability of interest on delayed reversal of availed Cenvat Credit, ensuring adherence to legal provisions and established precedents in such matters.