We are manufacturer of exciseble goods. We have taken Service Tax credit on our Input services consumed in manufacturing process. after some days we knews that in internal audit some credit are inadmisible & we reversed without utilisation,, after in Audit EA2000 it has pointed out & Auditor raise the query to pay the penalty on reversal amount,
Please advice if is there any related case laws..
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Credit taken and reversed amounts to credit not taken. There are case laws. Since you did not use the same ( Having sufficient balance of credit more than that of amount involved), no interest is chargeable and no penalty is impossible. Case law will be posted today.
Once CENVAT credit is reversed on pointing out audit interest is also liable to pay by you. If CENVAT credit is reversed and interest is also paid no show cause notice is to be issued. One no SCN is issued no penalty can be imposed. This is my view.
As per my view there is no required to pay the interest on reversal amount, if it is sufficient balance of credit available in our books.
Please give the reference case laws.
The above case law posted by me is not relevant for you. It was relevant for some other query. It was wrongly posted. Sorry for that.
I am posting Board's Circular and two judgements of the Supreme Court on this very issue. These are as under:-
Thank you for your valuable feedback..
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When there is sufficient balance, there will be interest. Rule 14 has specifically mentyioned this. The phase ' availedf oir utiliused' has been replaced by ' availed and utilised'. The decision of the Hon'ble Apex Court in the case of Ind swift ltd. Was based upon the provisions of law prior to amendment. Earlier in the case of Hindustan zinc it was pronounced that no interest is payable when the credit is not utilised.
The rule has become clear with the amendments. No interest is payable if credit is not utilised.
But rule 15 has not been amended. The word 'or' has not been replaced. Hence penalty will be imposed for wrong availment of credit even if there is no utilisation.
The decision of Ind fab has vindicated the department stand
An amendment to my reply. In the first line it should be no interest.
When we say credit reversed amounts to credit not taken, neither Rule 14 nor Rule 15 of Cenvat Credit Rules, 2004 comes into play. Regarding the literal meaning, there is no difference between 'credit taken: and 'credit availed'. Hence neither penalty nor interest is recoverable.
Rule 15 will be invoked only if Rule 14 comes into play.
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