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2015 (5) TMI 994 - CESTAT NEW DELHI

2015 (5) TMI 994 - CESTAT NEW DELHI - TMI - Levy of interest on reversal of cenvat credit - Period of limitation - irregular credit on capital goods has been taken which was subsequently reversed - Held that:- SCN has been issued beyond the period of one year from the relevant date, inasmuch as, the period involved in the present case is from July 2008 to February 2010 and SCN has been issued on 16.08.2011 - though SCN has been issued beyond the period of one year, but the proviso to section 11A .....

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artment well in advance before detection of the mistake by the Audit Wing.

The reliance placed by the Ld. DR on the judgment of Hon'ble Supreme Court in the case of Ind Swift Laboratories [2011 (2) TMI 6 - Supreme Court] has no application to the facts and circumstances of the present case because, the issue involved in the said decided case is with regard to interpretation of the word 'or' / 'and' contained in Rule 14 of the Cenvat Credit Rules, 2004. - Decided in favor of assessee. .....

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ed in the factory for use in the intended purpose. During the disputed period, the appellant reversed the cenvat credit taken on capital goods, for which no interest was paid for delayed reversal of such credit. Non-payment of interest was objected to by the Department and the Show Cause proceedings initiated in this regard was culminated in the adjudication order, wherein the interest liability was confirmed against the appellant. According to the Central Excise Department, once the irregular c .....

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ection of the mistake that the disputed goods will not qualify as capital goods, the appellant suo motto reversed the cenvat credit and took the said credit by treating the disputed goods as 'Inputs'. He submits that since the eligibility of disputed goods to cenvat credit under the inputs has not been disputed by the Department, the credit reversal under the head 'capital goods' and subsequent taking of credit under the head 'input' will not be considered as reversal at .....

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duct from the factory. Thus, he prayed that in absence of any loss of Revenue, interest cannot be imposed on the appellant since, the same is compensatory in nature. Ld. Advocate, further submits that SCN issued in this regard is barred by limitation of time having been issued beyond one year from the relevant date. To vindicate his above stand, the Ld. Advocate has cited the following judgments/ decisions rendered in the case of CCE Noida vs Accurate Chemical Industries reported in 2014 (310) E .....

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n the main part of section 11A, there is only mention of short payment/ non-payment of duty and there is no reference to the recovery of interest. Hence, according to him, in absence of any specific provision contained in section 11A, same provision dealing with the extended period will have no application and accordingly the Department has rightly invoked the provisions of Rule 14 of the Cenvat Credit Rules for confirmation of the interest liability. To strengthen his above submissions, he cite .....

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of the Rules. Since, the credit taken under the head 'capital goods' has been reversed and subsequently taken the same under the head 'inputs', it cannot be said that any excess credit has been taken, which calls for payment of interest. The said submissions of the appellant have not been addressed by the Authorities below. Interest liability is inbuilt in the cenvat statute with the objective of compensating the Government for non-receipt of the statutory dues within the prescr .....

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for credit for utilization towards the clearance of the final product from the factory. Hence, it cannot be said that the appellant has wrongly taken the disputed cenvat credit, for which Rule 14 of the Cenvat credit Rules, 2004 read with section 11A of the Central Excise Act, 1944 can be invoked for recovery of the interest amount. 6. I find support from the submissions of the Ld. Advocate that the SCN has been issued beyond the period of one year from the relevant date, inasmuch as, the period .....

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ellants have reflected the credit particulars in their periodic ER-1 returns duly filed before the Jurisdictional Central Excise Officers. Hence, the fact of taking of credit on the disputed goods and suo motto reversal thereof was known to the Department well in advance before detection of the mistake by the Audit Wing. 7. In this context, the Hon'ble Supreme Court in the case of Accurate Chemical Industries (supra) has held that once assessee has filed ER-1 return on monthly basis, the Ran .....

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d cannot be invoked, since the same has the application in rarest of the rare occasion, involving element of fraud, collusion or willful misstatement or suppression of facts, or contravention of the Central Excise Act or of the Rules made there under with intent to evade payment of duty. I also find that the Tribunal in the case of ITC ltd. (Supra) has held that since, the ER-1 Return has been filed, the Revenue could not invoke the extended period of limitation on the ground that the assessee h .....

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