TMI Blog2019 (2) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount equal to the cenvat credit taken on inputs. It is seen that the requirement of this Rule has been satisfied by the assessee - It is well settled position of law that once cenvat credit availed is reversed, it is to be considered as ab initio not availed - the assessee cannot be held to have availed cenvat credit irregularly in respect of inputs cleared as such. Demand of Interest - whether the assessee will be liable to pay interest on the cenvat credit availed on the inputs, which were never utilized in the manufacture? - Held that:- The assessee did not utilize the credit availed on the un-used inputs before reversal of the same. Under such circumstances, no interest liability will arise on the assessee. Penalty - Held that:- Since it is held that the credit availed cannot be held as irregular and no interest liability can be fastened on the assessee, there is no justification for imposition of penalty - penalty set aside. Appeal allowed - decided in favor of appellant. - Ex. Appeal No.626/09, 13/10 & CO-68/10 - FO/75136-75137/2019 - Dated:- 25-1-2019 - SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL) And SHRI V. PADMANABHAN, MEMBER (TECHNICAL) Shri N. K. Chowdh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 4. Revenue has also challenged a portion of the order. It is the case of the Revenue that the Adjudicating Authority should have imposed penalty under Rule 15(2) in addition to the penalty already imposed. Both the appeals are taken up together for decision through this common order. 5. The case of the assessee is argued by Shri N.K. Chowdhury, ld.Advocate. His main arguments are summarized below : (i) The assessee had procured various inputs for use in the manufacture of final products. However, one of the final products, i.e. Synthetic Detergent Powder, was never manufactured by the appellant though they had planned to do so. Hence, the inputs already procured were cleared as such and at the time of such clearance, the cenvat credit availed was debited. He refers to the findings of the Adjudicating Authority to the effect that the credit availed on inputs was not utilized in payment of duty for removal of their own manufactured goods. (ii) The ld.Advocate further submitted that since the credit availed has been reversed without utilization, no interest is liable to be paid on such credit. In this connection, he relied on the following decisions, wherein the Larger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commence the manufacture of this product while continuing with the manufacture of all other products in the factory. The inputs procured for the same, were cleared as such, since they could not be used in the manufacture. 9. The Cenvat Credit Rules, 2004, provides for the circumstances, in which the inputs procured for manufacture, can be cleared as such. Rule 3 (4) subsequently provides for this scenario. It is specifically provided that when inputs are cleared as such, the manufacturer is required to reverse the amount equal to the cenvat credit taken on inputs. It is seen that the requirement of this Rule has been satisfied by the assessee. There is no dispute that at the time of clearance of inputs as such, such reversal, as provided under Rule 3(4)(b) has been carried out. It is well settled position of law that once cenvat credit availed is reversed, it is to be considered as ab initio not availed. Such view finds support in several decisions including the case of Chandrapur Magnet Wires (P) Ltd. Vs. Collector reported in 1996 (81) ELT 3 (S.C.). Similar views have also been taken by the Apex Court in the case of Commissioner Vs. Bombay Dyeing and Mfg. Co.Ltd. reported in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Poddar Cement (P) Ltd. reported in 226 ITR 625 (SC); (iii) Commissioner v. Bombay Dyeing and Mfg. Co. Ltd. reported in 2007 (215) E.L.T.3 (S.C.);and (iv) Pratibha Processors v. Union of India reported in 1996 (88) E.L.T. 12 (S.C.), held as follows :- 7. The next question which falls for consideration is as to whether the assessee is liable to pay interest under Rule 14 of Cenvat Credit Rules, 2004read with Section11AB of the Central Excise Act, 1944? 8. The said issue came up for consideration before the Hon'ble Supreme Court in the case of Union of India v. Ind-Swift Laboratories Ltd., reported in 2011 (265) E.L.T. 3 (S.C.). In the said case, the High Court read down the Rule to mean that where Cenvat credit has been taken and utilized wrongly, interest should be payable from the date the Cenvat credit has been utilized wrongly and interest should not be claimed simply for the reason that the Cenvat credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. The assessee's case in this appeal is that the credit has been reversed. Therefore, mere wrong availment will not attract payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Commissioner of C.Ex. S.T., LTU. Bangalore v. Bill Forge Pvt. Ltd reported in 2012 (279) E.L.T.209 (Kar.) and the decision of the Hon'ble Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. v. Collector of C. Excise, Nagpur reported in 1996 (81) E.L.T.3 (S.C.). 10. We do not agree with the submissions made by the Learned Counsel for the assessee, as the decisions rendered in the aforesaid cases by the Allahabad High Court as well as the Karnataka High Court as well as the Hon'ble Supreme Court arose out of a case where the assessee claimed benefit of an exemption notification. The question which fell for consideration in those cases is as to whether reversal of credit after the removal of the final product would entitle the assessee therein to the benefits of exemption_ notification, which states that the reversal of the credit should be done before the removal of the products. In such circumstances, the Courts considered the issue and said that for the purpose of extending the benefits of exemption notification, the time of reversal was not the material and reversal I of the credit would amount to no credit being taken. In these d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the Learned Counsel for the assessee that the amendment to Rule 14 of CCR, 2004 was not placed before the Division Bench in Sundaram Fasteners Limited (supra). As pointed out earlier, the amendment can have no impact on the present proceedings, as admittedly, the period in question is between July, 2008 to March, 2009. In any event, as observed by us earlier, the amendment cannot be treated to have retrospective effect and an amendment to a statute, which has been given prospective effect, cannot be used as an aid to interpret the statutory provision, which existed prior to the amendment, unless and until it is held to be c1arificatory.No such argument was advanced before us to state that the amendment to Rule 14 of the CCR, 2004 was clarificatory in nature. 12. In view of the above, we conclude that no interest liability is to be imposed on the assessee. Since we have held that the credit availed cannot be held as irregular and no interest liability can be fastened on the assessee, we find no justification for imposition of penalty. Consequently, the impugned order is modified to the extent that the demand of interest and imposition of penalty is set aside. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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