TMI Blog2013 (9) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... attributed to them, no penalty can be imposed on them and the penalty imposed by the Commissioner (Appeals) required to be set aside - Union of India v. Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court] - when Cenvat credit was taken, interest was to be paid even if such credit had not been utilized for payment of excise duty. Whether interest was payable under Section 11AA of the Central Excise Act which was in force from 26-5-1995 to 11-5-2001 – Held that:- A careful reading of the provision shows that it was applicable only when a short levy or non-levy of excise duty occurred - Wrong Cenvat credit taken can result in short levy or non-levy of excise duty only when such wrong credit was utilized for payment of excise duty - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, an amount of Rs. 4,62,003/- appeared to be payable as interest for having taken the credit wrongly. 2. A show cause notice was issued for recovering the said interest and also proposing to impose penalty under Rule 173Q of the erstwhile Central Excise Rules for having taken credit wrongly. The matter was adjudicated by the Assistant Commissioner who confirmed the demand of interest amount of Rs. 4,62,003/- and also imposed penalty of Rs. 9,44,601/- under Rule 173Q of the erstwhile Central Excise Rules read with Section 11AC of the Central Excise Act. Aggrieved by the order, M/s. Rama Industries Ltd. filed appeal with the Commissioner (Appeals). The Commissioner (Appeals) confirmed the interest demanded. However, he reduced the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be set aside. 6. The learned DR on the other hand relies on the decision of the Apex Court in the case of Union of India v. Ind-Swift Laboratories Ltd. reported in 2001 (265) E.L.T. 3 (S.C.) wherein the Hon ble Supreme Court has held that when Cenvat credit is taken, interest is to be paid even if such credit has not been utilized for payment of excise duty. Therefore, he argues that interest is correctly demanded. 7. In the case of penalty, the learned DR submits that the position that the equipments were being used exclusively for manufacture of an exempted product was always known to the assessee and they should not have taken such credit and the argument that they have taken it innocently, is without any basis. He also states tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the manufacturer and the provisions of sections 11A and 11AB of the Act shall apply mutatis mutandis for effecting such recoveries. 9.2 From 1-4-2000 to 30-6-2001 Recovery of credit wrongly taken 57AH. (1) Where the CENVAT credit has been taken or utilized wrongly, the same along with interest shall be recovered from the manufacturer and the provisions of Sections 11A, 11AA and 11AB of the Act shall apply mutatis mutandis for effecting such recoveries. (2) Where the CENVAT credit has been taken or utilized wrongly on account of fraud, wilful misstatement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intention to evade payment of duty, then, the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H for the first time with effect from 1-4-2000. So there cannot be an argument that interest was payable for taking wrong credit under the Rules providing for taking Cenvat Credit Scheme prior to 1-4-2000. However, interest will be payable from 1-4-2000 in view of the decision of the Apex Court in Ind-Swift Laboratories (supra). 12. Now the issue to be examined is whether such interest was payable under Section 11AA of the Central Excise Act which was in force from 26-5-1995 to 11-5-2001. A careful reading of the provision shows that it was applicable only when a short levy or non-levy of excise duty occurred. Wrong Cenvat credit taken can result in short levy or non-levy of excise duty only when such wrong credit is utilized for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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