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Commissioner Of C. Ex. & Cus., Raipur Versus Vandana Vidyut Ltd.

2016 (5) TMI 381 - CHHATTISGARH HIGH COURT

Liability for payment of interest - Rule 14 of the Cenvat Credit Rules, 2004 - Cenvat credit taken but reversed before utilization - Appellant submitted that the Tribunal committed manifest error of law in holding that if the Cenvat credit had been taken by making paper entries only and had not been utilised, there is no liability to pay interest. Held that:- the fact that the liability would arise from wrong taking of Cenvat credit by making entries and that utilisation was the second step ther .....

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Koshy, J. Shri Maneesh Sharma, Advocate, for the Appellant. Shri Vinay Jain, Advocate, for the Respondent. JUDGMENT [Judgment per : Navin Sinha, C.J.]. - The present appeal arises from order dated 26-11-2013 dismissing Excise Appeal No. 1900-1902/2006-EX(SM) [2016 (331) E.L.T. 249 (Tribunal)] by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal). The Tribunal held that if Cenvat credit had been taken but was reversed before utilization, interest was .....

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sp;We have heard Counsel for the parties at length and are satisfied that the question of law as framed above can be answered at this stage itself. The appeal is not required to be admitted for hearing. 4. Learned Counsel for the Appellant submitted that under Rule 14 the liability for payment will arise on the mere happening of Cenvat credit taken wrongly. Relying on 2011 (265) E.L.T. 3 (S.C.) = 2012 (25) S.T.R. 184 (S.C.) [Union of India v. Ind-Swift Laboratories Ltd.], it was submitted t .....

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y interest. Reliance on 2012 (26) S.T.R. 204 (Karnataka) = 2012 (279) E.L.T. 209 (Kar.) [Commissioner of Central Excise and Service Tax, Bangalore v. Bill Forge Pvt. Ltd.] was erroneous. 5. Learned Counsel for the Respondent heavily relied upon Bill Forge Pvt. Ltd. (supra) to submit that the mere taking of Cenvat credit by paper entries without utilization of the same will not invite interest under Rule 14 after reversal. It was next submitted that the observations in Ind-Swift Laboratories .....

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ered the submissions on behalf of the parties and the question of law framed, it is first considered appropriate to set out Rule 14 in its entirety: RULE 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. - Where the Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections .....

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Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows :- 10. …... In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statutes and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply .....

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. We consider it appropriate to set out the discussion in this regard as follows :- 17….. 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 provides that where Cenvat credit has been taken or utilised wrongly or .....

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ening of any of the three aforesaid circumstances such credit becomes recoverable along with interest. 9. The aforesaid consideration takes it beyond the ambit of any controversy that under Rule 14, even if the Cenvat credit was taken by making paper entries by one not entitled to the same, the liability for interest arises irrespective of its reversal before utilization. The conclusion of the Tribunal that the Cenvat credit having remained a paper entry only liability for interest would no .....

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