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2015 (11) TMI 1353 - CESTAT BANGALORE

2015 (11) TMI 1353 - CESTAT BANGALORE - TMI - Levy of interest and penalty on reversal of CENVAT credit - they had only taken the CENVAT credit erroneously but had sufficient balance in their account of CENVAT credit - Held that:- date 1.4.2012 is the watermark i.e., the activities and the operations of an assessee (manufacturer or service provider) have to follow the provisions of Rule 14 of CENVAT Credit Rules as they existed then (before 1.4.2012); and after 1.4.2012 when the subject amendmen .....

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wording ĎANDí and reading it so.

Respondent viz., Commissioner of Central Excise and Service Tax, LTU, Bangalore has not been given any evidence other than the fact of taking wrong or erroneous CENVAT credit to prove appellantís intention to evade payment of service tax. When no intention to evade payment of service tax is proved beyond doubt it will not be right to impose penalty on the appellant under Section 78 read with Rule 15(3) of CENVAT Credit Rules, 2004. Consequently on the .....

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cate, V. Lakshmikumaran & V. Sridharan For the Respondent : Mr. Mohd. Yousaf, Addl. Commissioner (AR) ORDER Per : ASHOK K ARYA Both the parties have been heard in detail. 2. Matter concerns with the liability of interest and the penalty on unauthorized availment/taking of CENVAT credit by the appellant. 3. The appellant viz., M/s. Dell India Pvt. Ltd. through their learned advocate pleads that Rule 14 of CENVAT Credit Rules was amended w.e.f. 1.4.2012 clarifying that the liability of interes .....

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he case of CCE, Madurai vs. Strategic Engineering (P) Ltd.: 2014 (310) E.L.T. 509 (Mad.) says that Honble Madras High Court clarified that as the Rule 14 of CENVAT Credit Rules was subsequently amended, they do not have liability of any interest and penalty unless the CENVAT credit taken is utilized by them. He says that as they did not utilize certain portion of their CENVAT credit, in that case, interest and penalty is not liable to be paid by them. In support, he is also citing decision of t .....

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ngalore argues that the provisions of Rule 14 as existed for the relevant period are very clear saying that wherever CENVAT credit has been wrongly taken or utilized or erroneously refunded, the liability of interest and equivalent penalty would arise on the assessee in the said cases. Learned AR refers to the decision of the Hon ble Supreme Court in the case of UOI vs. Ind-Swift Laboratories Ltd.: 2011 (265) E.L.T. 3 (S.C.) saying that Rule 14 then specifically provided that wherever CENVAT cre .....

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the case of CCE, Pune-I vs. GL & V India Pvt. Ltd. decided on 27.4.2015 and reported in 2015 (321) E.L.T. 611 (Bom.) and says that this decision quoted and followed the Hon ble Supreme Court decision made in the case of Ind-Swift (supra). He further argues that the decision of Hon ble Madras High Court in the case of CCE vs. Strategic Engg. (supra) was also quoted and considered by Hon ble Bombay High Court. 5. After considering the facts on record and the submissions of both the sides, it i .....

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ne-I vs. GL & V India Pvt. Ltd. (supra) make the position clear that one cannot do away with the wording OR as appeared in Rule 14 twice prior to the watermark date 1.4.2012 and one cannot replace the said wording OR with the wording AND and reading it so. In order to make matter more clear, let us quote Hon ble Supreme Court s decision, which pronounced as below: 17. We have very carefully read the impugned judgment and order of the High Court. The High Court proceeded by reading it down to .....

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nterest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongly utilized. In our considered opinion, the High Court misread and misinterpreted the aforesaid Rule 14 and wrongly read it down without properly appreciating the scope and limitation thereof. A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provi .....

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ngly or has been erroneously refunded as the word AND. On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest. 18. We do not feel that any other harmonious construction is required to be given to the aforesaid expression/provision which is clear and unambiguous as it exists all by itself. So far as Section 11AB is concerned, the same becomes relevant and applicable for the purpose of making recovery of the amount due and payable. Therefor .....

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is not open to read words and expressions not found in the provision/statute and thus venture into a kind of judicial legislation. It is also held by this Court that the Rule of reading down is to be used for the limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute 5.1 Hon ble Bombay High Court in the case of CCE, Pune-I vs. GL & V India Pvt. Ltd. (supra) has also considered this issue in detail and held that the word OR ca .....

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as penalty. With great respect to the Hon ble Judges of the Madras High Court, we may say that this is not what has been held by their Lordships of the Apex Court. The Apex Court has in clear terms held that the interpretation as paced by the Punjab and Haryana Court for invoking the provisions of Rule 14, there has to be taking as well as utilizing is not correct in law. The Apex Court has held that such an interpretation is totally impermissible. In that view of the matter, the said judgment w .....

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