TMI BlogUnused CENVAT Credit does not incur any interest liabilityX X X X Extracts X X X X X X X X Extracts X X X X ..... Unused CENVAT Credit does not incur any interest liability - By: - CA Bimal Jain - Central Excise - Dated:- 24-6-2023 - - The CESTAT, Kolkata in M/S. NATIONAL ALUMINIUM COMPANY LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BHUBANESWAR-I - 2023 (6) TMI 368 - CESTAT KOLKATA held that the amendment in Rule 14 of the CENVAT Credit Rules, 2004 ( the CC Rules ) which previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly read as 'taken or utilized' but was changed to 'taken and utilized', clearly indicated the intention of the legislature not to impose interest where the credit had been taken but not utilized. Facts: M/s. National Aluminium Company Limited ( the Appellant ) had inadvertently taken CENVAT credit twice in the month of August, 2007 due to a clerical error and on rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lizing the mistake the Appellant suo-moto reversed such credit excess credit in the month of April, 2008. The Adjudicating Authority observed that although the Appellant has reversed the excess credit taken, it had utilized the same thus, failed to pay appropriate interest chargeable thereon. Consequently, a Show Cause Notice dated April 21, 2009 ( the SCN ) ordering Appellant to sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w how the Appellant was not liable to pay interest on excess utilised credit. Thereafter, the Adjudicating Authority vide the Order-in-Original dated May 31, 2010 confirmed the demand of interest, aggrieved by which the Appellant filed an appeal before the Commissioner, Customs Service tax, Bhubaneswar (Appeals) who vide Order-in-Appeal No.17/CE/BBSR-I/2011 dated February 18, 2011 ( the Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned Order ) confirmed the demand of interest Under Rule 14 of the CC Rules read with Section 11AB of the Central Excise Act, 1944 ( the CE Act ) on the amount of Cenvat credit taken inadvertently but not utilized. It is to be noted that, the matter has travelled up to the High Court. The High Court set aside the order of the lower authorities vide its Order dated November 30,2022 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd restored the case before the Tribunal for fresh hearing on merits. Before the CESTAT the Appellant contended that it had sufficient balance of CENVAT Credit in its books of accounts and had not utilized the credit taken inadvertently, further submitted that Rule 14 of the CC Rules was amended vide Notification No. 18/2012 CE (NT) dated March 17, 2012 and the entry was substituted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o taken and utilized wrongly and it is a settled position of law that substitution leads to replacement of the old provision by a new provision. Hence, no interest was payable where CENVAT credit has been merely taken but not utilized. The Revenue Department ( the Respondent ) submitted that the Appellant is liable to pay interest on credit taken on an irregular basis, even though the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not utilized by them in terms of Rule 14 of the CC Rules . Issue: Whether the Appellant was liable to pay interest on unutilized reversed CENVAT Credit? Held: The CESTAT, Kolkata in M/S. NATIONAL ALUMINIUM COMPANY LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BHUBANESWAR-I - 2023 (6) TMI 368 - CESTAT KOLKATA held as under: Observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Appellant has asserted that it had sufficient credit balance in its account. Further observed that, the issue of interest on unutilized reversed credit entry was the subject matter before the Hon'ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. - 2011 (2) TMI 6 - SUPREME COURT . The said Hon ble Supreme Court judgment was relied by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE - 2011 (4) TMI 969 - KARNATAKA HIGH COURT wherein it was held that in case the Cenvat credit taken is not utilized, no interest liability would arise. Moreover, the CESTAT Kolkata, in M/S SAIL VERSUS CGST EXCISE, BOLPUR - 2019 (9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 886 - CESTAT KOLKATA held that the erstwhile Rule 14 of the CC Rules read as taken or utilised , which had been amended and substituted by the words taken and utilised credit has been taken but not utilised and is subsequently reversed, it leads to no consequence and results in a revenue neutral situation. Noted that, the Appellant had sufficient credit balance and there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no loss of revenue to the exchequer, the imposition of interest in the present proceedings was unnecessary. Held that, the imposition of interest in the present proceedings cannot sustain. Set aside the Impugned order. (Author can be reached at info@a2ztaxcorp.com ) - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... 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