TMI Blog2016 (11) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... ional High Court’s ruling, since while a High Court is at liberty to distinguish a persuasive decision of another High Court, the same would not amount to an overruling of the said decision nor operates to operate eclipse` the precedential value of the other High Court’s ratio insofar as it applies as an exposition of law within the territorial limits of that High Court. The decision of the Karnataka High Court in Commissioner of C. Ex. & S.T., LTU, Bangalore v. Bill Forge Pvt. Ltd.[2011 (4) TMI 969 - KARNATAKA HIGH COURT] constitutes the law governing and operative on the facts and transactions in the current appeal. Since the appellant had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise. - E/493/2012-SM - Interim Order No. 59/2016, dated 29-2-2016 and I.O. No. 168/2015, dated 23-7-2015 - Dated:- 29-2-2016 - G. Raghuram, President, Ms. Archana Wadhwa, Member (J) and Shri Ashok K. Arya, Member (T) Shri Dattatray D. Bhat, Advocate, for the Appellant. Shri N. Jagdish, Superintendent (AR), for the Respondent. ORDER [Order per : Archana Wadhwa, Member (J)] . - As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Madras High Court in the case of CCE, Chennai-IV v. Sundaram Fasteners Ltd. [2014 (304) E.L.T. 7 (Mad.)]. After taking note of the Hon ble Supreme Court s decision in the case of Ind-Swift Laboratories Ltd. and Hon ble Karnataka High Court s decision in the case of Bill Forge Pvt. Ltd., the Hon ble High Court held that the credit wrongly availed even though not utilised becomes recoverable along with interest. 6. Inasmuch as there are two contrary decisions of the High Courts, one by the Hon ble Karnataka High Court and the other by the High Court of Madras and inasmuch as the said issue keeps on repeatedly coming up before the Tribunal, I deem it fit to refer the matter to the Hon ble President for constitution of a Larger Bench on the following question of law :- When the wrongly availed credit is reversed before utilising the same, whether interest liability would arise in respect of the same or not. (Order pronounced on 23-7-2015) 7 . [Per : Justice G. Raghuram, President]. - Interim Order No. 168/2015, dated 23-7-2015 in Excise Appeal No. 493/2012-SM [2015 (324) E.L.T. 571 (Tri.-Bang.)] has referred for consideration of the Larger Bench, on the following quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, as and when it is due and payable. The levy of interest is on the actual amount which is withheld and the extent of delay in paying tax on the due date. If there is no liability to pay tax, there is no liability to pay interest. Section 11AB of the Act is attracted only on delayed payment of duty i.e., where only duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person liable to pay duty, shall in addition to the duty is liable to pay interest. Section do not stipulate interest is payable from the date of book entry, showing entitlement of Cenvat credit. Interest 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 taken or utilized wrongly. 22. In the instant case, the facts are not in dispute. The assessee had availed wrongly the Cenvat credit on capital goods. Before the credit was taken or utilized, the mistake was brought to its notice. The assessee accepted the mistake and immediately reversed the entry. Thus the assessee did not take the benefit of the wrong entry in the account books. As he had taken credit in a sum of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Now to the relevant facts of the appeal in which the present order of reference has been made. The assessee/appellant, is engaged in the manufacture of tyres, tubes and flats under Chapter 40 of the Central Excise Tariff Act, 1985 and was availing Cenvat credit of duty-paid on inputs/capital goods and input services. During audit of its unit, appellant was found to have availed Cenvat credit twice, in respect of certain invoices. The appellant admitted this to be an error and immediately reversed the wrongly availed Cenvat credit, of ₹ 1,38,748/-. Proceedings were initiated by the show cause notice dated 17-12-2009 proposing levy of interest and penalty for wrongful availment of Cenvat credit. The proceedings culminated in an order passed by the primary adjudicating authority confirming interest of ₹ 11,959/- under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 apart from penalty of ₹ 2,000/- under Rule 15A of the Cenvat Credit Rules. The Commissioner (A) rejected assessee s appeal and upheld the primary adjudication order, by the impugned order. 14. The appellant is a company registered under Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 167 of the Sea Customs Act, 1878 would be binding on authorities functioning within the jurisdiction of the High Court and the Supreme Court held that it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. ........ We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or Tribunals under its superintendence . . This decision has been followed by the Bombay High Court in CIT v. Godavaridevi Saraf reported in 1978 (2) E.L.T. (J624). 10.1 In the case of U.P. Laminations v. Collector of Central Excise, Kanpur reported in 1988 (35) E.L.T. 398 (T), the Tribunal has followed the Supreme Court judgment in the case of East India Commercial Co. case and set aside the show cause notice issued against the appellants therein as it was in direct violation of the law laid down by the Allahabad High Court within whose jurisdiction both the manufacturer and the Collector of Central Excise were situated. 10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptance since, in their view, mere taking of Cenvat credit wrongly by making entries in the Cenvat register would equally invite liability to interest since that is the proper interpretation of the Supreme Court ruling in Ind-Swift Laboratories Ltd. (supra). Learned Departmental Representative has also contended that the Hon ble High Court of Bombay in Commissioner of Central Excise, Pune-I v. GL V India Pvt. Ltd. - 2015 (321) E.L.T. 611 (Bom.) had considered the Supreme Court s decision in Ind-Swift Laboratories Ltd. (supra), the Karnataka High Court ruling in Bill Forge Pvt. Ltd. (supra) and the decision of the Madras High Court in Commissioner of Central Excise, Madurai v. Strategic Engineering (P) Ltd. - 2014 (310) E.L.T. 509 (Mad.) and held that the liability to interest would arise either on the taking or utilization of credit, irregularly. On behalf of Revenue, it is also contended that the Single Member decision of the Tribunal in Dr. Reddy s Laboratories Ltd. v. Commr. of C. Ex. S.T., Hyderabad - 2013 (293) E.L.T. 81 (Tri.-Bang.) concluded that the Hon ble Karnataka High Court s decision in Bill Forge Pvt. Ltd. is per incuriam, inter alia of Rule 3 of the Cenvat Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, considers the law propounded by the superior Court as not commending its acceptance. The observations of the Single Member Bench in Dr. Reddy s Laboratories Ltd. (supra) and of the Division Bench in Bharat Heavy Electricals Ltd. (supra), that the decision of the Hon ble Karnataka High Court in Bill Forge Pvt. Ltd. is per incuriam, do not represent the correct and authorized application of the per incuriam principle. These decisions are accordingly overruled, to that extent. 20. The decision of the Larger Bench in Kashmir Conductors (supra) has been referred to and approved by the Hon ble Supreme Court in Collector of Central Excise v. Rallis India Ltd. - 2002 (142) E.L.T. 19 (S.C.). The decision of the Hon ble Karnataka High Court in Bill Forge Pvt. Ltd. being the decision of the jurisdictional High Court and in the context of the fact that the entire cause of action, the transactions in issue, the territory within which the appellant-assessee conducts its business and has its registered office and whereat proceedings were initiated and culminated, constitutes the operative law, for the parties to this appeal. Though the Hon ble High Courts of Madras, Bombay and Chhattisgar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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