TMI Blog2023 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it had neither availed not utillised CENVAT credit and therefore no interest was liable to be paid. It is in that factual matrix that Hon ble High Court of Karnataka has held that no interest was liable to be paid and distinguished it from the judgement of IndSwift. Recovery of Interest - no show-cause notice was issued to the appellant for recovery of interest - time limitation - HELD THAT:- If there is no specific provision under which a show-cause notice can be issued, any notice issued without the authority of law cannot be sustained. If we see the scheme Finance Act 1994 Section 75 provides for payment of interest automatically based on the amount of service tax due. Therefore there is no mechanism for separately deciding how much interest is due and adjudicating upon it. The only question is if interest is not paid and notice must be issued to the appellant, in some form asking it to pay the interest so that it can defend itself - the notice for demand of interest alone can be issued only after quantifying it. It is a different matter if the show-cause notice is issued for payment of service tax along with applicable interest. If a demand has to be issued only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of the case. 2. During hearing learned counsel for the appellant submits that he is pressing only for setting aside of the demand and interest of Rs 81,21,004/- under Rule 14 of the CENVAT Credit Rules 2004 (CCR) read with Section 11AB of the Central Excise Act 1944 (Act) and ordered to be recovered under Section 87(b)(i) of the Finance Act 1994 (Finance Act) and consequential relief. He has specifically said that he is not pressing the prayer to strike down Rules 14 of CCR as ultravires of Section 94 of the Finance Act. He was also not pressing the appellant s assertion to avail and utilize CENVAT credit amounting to Rs 2,91,17,695/- reversed by it on 06.12.2011. We therefore proceed to hear both sides on this demand and have perused the records. 3. On behalf of the appellant the following submissions have been made. i) A show-cause notice has been issued for recovery of interest and the limitation period prescribed for recovery of tax equally applies to recovery of interest in the present case, the period is barred by limitation. The reliance in this case is placed on the following case laws: 1) Hindustan Insecticides Ltd Vs CCE ST [2013( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Department on various dates in the months of October November 2011, on the accounts of your Channel. The said Audit covered the period from April 2008 to March 2011. Copy of the Audit Report referred above is enclosed for your information. 2. Para 1 of the Audit Report deals with the excess availment of Cenvat Credit of input service tax to the tune of Rs 2,91,17,695/- which has been reversed by you vide Entry Sl No. 9 dated 06.12.2011 in your Cenvat Credit Register. The issues lies here is that an interest component of Rs 81,21,004/- is payable by you for such excess availment during relevant time. The calculation sheet for arriving said interest of Rs 81,21,004/- is enclosed for your information. 3. You are directed to pay the said interest IMMEDIATELY within 10 days from the date of receipt of this letter and submit the GAR-7 Challan to this Office. The interest may be credited to the Accounting Code 00440016 of Advertising Agency. The appellant responded to that letter by letters dated 03.05.2012 and 01.06.2012 stating that it had availed CENVAT credit but had not utilized it and therefore no benefit had accrued to it and no interest liability should ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore, High Court on a conjoint reading of Section 11AB of the Act and Rules 3 4 of the Credit Rules proceeded to hold that 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 wrongly utilized. 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 utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty. Even in Rule 14 on which reliance is placed, the word used is taken or utilized wrongly . It does not mean that when an entry is made in the account book showing that assessee is entitled to take credit of the duty paid on inputs or capital goods or input services the assessee is benefited to any extent. It is only, when that credit is taken or utilized to discharge the liability to pay duty he is benefited. If the said credit is taken wrongly, the liability to pay interest arises. In the instant case, though the entry was made in the account book showing availment of credit, on being pointed out, the said entry was reversed. Thus the assessee did not take or utilize the benefit of the said credit and therefore there is no liability to pay interest. Therefore he submitted that even in the judgment relied on by the learned Counsel for the Revenue, in the facts of this case, the interest was levied from the date the duty was payable and not from the date the entry of Cenvat credit made in the books of account. The Supreme Court was concerned about the interpretation placed by Punjab and Haryana High Court while interpreting OR as to be read as AND found in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned counsel fairly submits that Rule 14 of CCR as applicable during the relevant period provided for interest to be recovered where CENVAT credit has been availed or utilized wrongly. However, according to him if CENVAT credit was not utilized and has been reversed, mere availment of CENVAT credit does not cause any prejudice to the Revenue and therefore the appellant should not be asked to pay interest. We cannot agree with learned counsel s submissions. As applicable during the relevant period, Rule 14 of CCR provided for interest where CENVAT credit was availed or it was utilized. The Hon ble Supreme Court has interpreted this clause in the case of Indswift Laboratories in this manner and has clearly held that the High Court had attempted erroneously to read down the provisions by way of substituting the word OR by AND so as to give relief to the assessee. This decision was followed in various other judicial decisions. 11. The case of Billforge Pvt Ltd was different inasmuch as it was an assertion of the learned counsel for the assesse in that case that it had neither availed not utillised CENVAT credit and therefore no interest was liable to be paid. It is in that f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
