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Hemarus Industries Ltd. Versus Commissioner of Central Excise Kolhapur

Reversal of CENVAT credit - whether interest is liable on the cenvat credit which was reversed and whether the appellant is liable to penalty under Rule 15(1) of the Cenvat Credit rules, 2004? - Held that: - the unit had not commenced production when the investigation started and hence there was no clearance from the factory. As there was no clearance from the factory, there was no question of utilization of the cenvat credit availed by the party - reliance placed on the decision of the case GTL .....

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is not at all sufficient for claiming of interest as well as penalty - the appellants are not liable to penalty. - Appeal allowed - decided in favor of appellant. - Appeal No. E/297/12-Mum - Order No.A/93027/16/SMB - Dated:- 30-9-2016 - Mr. Devender Singh, Member (Technical) Shri J.N. Somaiya, Advocate for the Appellant Shri S.V. Nair, Superintendent (A.R.) for the Respondent ORDER Per Devender Singh This appeal is directed against order-in-appeal No. PII/RKS/140/2011 dated 30.11.2011 passe .....

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s revealed that cenvat credit on these items was not admissible to them. Statement of General Manager (Tech.) of the appellant was recorded and the appellants during the course of investigation, realized their mistake and reversed the inadmissible cenvat credit availed on the basic customs duty and cess and also reversed the credit availed on the structural items. The dispute is whether interest is liable on the cenvat credit which was reversed and whether the appellant is liable to penalty unde .....

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the statement of Shri J. Venkatrao, General Manger of the appellant (Questions 3 and 4), to substantiate that production was not started. He further submits that since there was no production and no clearance prior to the reversal of the cenvat credit, there is no loss to the Revenue as the cenvat credit had not been utilized at any stage. He has tried to distinguish the judgment of the Hon ble Supreme Court in the case of Indo-Swift laboratories Ltd. Vs. CCE as reported in 2015 (12) TMI-1050-C .....

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s no loss to the Revenue and as per the case laws relied by him, interest and penalty be set aside. 4. The Ld. AR appearing for the Revenue, on the other hand, submits that the onus and responsibility to take admissible credit was on the party as per Rule 9(5) of the Cenvat Credit Rules. Relying heavily on the judgment of the Hon ble Supreme Court in the case of Indo-Swift Laboratories as reported in 2011 (2)6- SC, he argued that the law does not make distinction on the cause of taking credit an .....

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General Manager, that the unit had not commenced production when the investigation started and hence there was no clearance from the factory. This fact has not been contested ted by the Ld. AR. As there was no clearance from the factory, there was no question of utilization of the cenvat credit availed by the party. On these facts, the case of GTL Infrastructure Ltd. Vs. CCE (supra) cited by the Ld. Advocate, is directly applicable. In the said judgment, the Tribunal held as below: The case in h .....

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the said facts are not applicable to the facts in hand. In these terms, we hold that the appellants are not liable to pay interest for wrongful availment of Cenvat Credit which has been reversed before utilization by the appellant in light of the decision of the Hon ble High Court in the case of Bill Forge P. Ltd. (supra) which has been followed by coordinate bench in CCE, Raipur Vs. M/s. Sharda Energy and Minerals Ltd. -2013 (291) E.L.T. 404 (Tri. Delhi) and in Commissioner of C. Ex. Allahabad .....

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