TMI Blog2009 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 16-8-2007 calling upon the petitioner to deposit a sum of Rs. 49,27,473/- towards the balance amount of interest in pursuance of the order passed by the Settlement Commission on 19-1-2007. 2. The petitioner company is engaged in the manufacture of bulk drugs classifiable under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 (for short "the Tariff Act"). The petitioner during 1-11-2001 to 31-3-2006 received invoices. On the basis of such invoices, the petitioner claimed CENVAT credit of Rs. 6,50,44,412/-. Out of the said amount, the petitioner utilized credit of Rs. 5,71,47,148/- only. On 8-3-2006, staff of the Director General of Central Excise Intelligence searched factory as well as corporate office of the petitioner. The Directors of the company admitted wrong availment of above-said CENVAT credit. It is the case of the petitioner that a sum of Rs. 4 crores was deposited through 8 TR-6 challan in the month of March, 2006. In November 2006, the petitioner reversed CENVAT amounting to Rs. 1,45,67,660/-. The petitioner also deposited a sum of Rs. 25,79,488/- through RG 23A Pt-II vide entry Nos. 1766, 1767 and 1768 dated 22-2-2006. Thus, total sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CENVAT credit was wrongly availed and not from the date of utilization of a part of balance of such credit. It was also found that such issue was not raised in the settlement proceedings, therefore, final order passed in the matter was conclusive and the same cannot be re- opened. It was thereafter on 16-8-2007, the interest liability was reworked out to Rs. 1,19,27,443/-. The petitioner was called upon to pay the balance amount of interest of Rs. 49,27,473/- after adjusting Rs. 70 lacs deposited by the petitioner earlier. It is the said order which is subject matter of challenge in the present writ petition. 6. Learned counsel for the petitioner relied upon the order passed by the Supreme Court in case reported as Commissioner of Central Excise, Mumbai-I v. Bombay Dyeing Mfg Company Limited, 2007 (215) E.L.T. 3 (S.C.) 2007 (8) SCC 177, to contend that since the assessee is free to reverse the credit before utilization of CENVAT credit and, therefore, liability of payment of tax does not fall on the assessee even if CENVAT credit has been wrongly taken. The availment of credit by itself does not create any liability of payment of any excise duty. The availment of CENVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11A till the date of payment of such duty (emphasis added) xx xx xx xx xx" Cenvat Credit Rules, 2004 "Rule 3. Cenvat credit - (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of- (i) the duly of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act; xx xx xx xx xx (2) and (3) xx xx xx xx (4) The CENVAT credit may be utilized for payment of - (a) any duty of excise on any final product; or (b) to (e) xx xx xx xx xx Rule 4. Conditions for allowing Cenvat credit. - (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs it the factory of the manufacturer or in the premises of the provider of output service. xx xx xx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. It is compensatory and different from penalty which is penal in character. Similarly, in Commissioner of Customs v. Jayathi Krishna Co. - 2000 (119) E.L.T. 4 (S.C.) = (2000) 9 SCC 402, it was held that interest on warehoused goods is merely art accessory to the principal and if principal is not payable, so is it for interest on it. In view of the aforesaid principle, we are of the opinion that no liability of payment of any excise duty arises when the petitioner availed CENVAT credit. The liability to pay duty arises only at the time of utilization. Even it CENVAT credit has been wrongly taken, that does not lead to levy of interest as liability of payment of excise duty does not arise with such availment of CENVAT credit by an assessee. Therefore, interest is not payable on the amount of CENVAT credit availed of and not utilized. 11. Reliance of respondents on Rule 14 of the Credit Rules that interest under Section 11AB of the Act is payable even if CENVAT credit has been taken. In our view, said clause has to be read down to mean that where CENVAT credit has been taken and utilized wrongly, interest should be payable on the Cenvat credit taken and utilized wrongly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date. It is being interpreted that it refers to deposit of duty amount by the focal point banks into the account of Government. This is not the intention. Once the assessee has deposited a cheque in bank and the same is honoured or pays in cash/drafts and the bank gives receipt stamp on TR-6 challans, the same shall be treated as 'credited to the account of the Central Government". 15. Such clarification stipulates that once the assessee has deposited a cheque in bank and the same has been honoured and the bank gives receipt stamp on TR-6 challans, the same shall be treated as 'credited to the account of the Central Government'. The fact that payment of Rs. 50 lacs was taken into consideration in the show cause notice and in the order passed by the Settlement Commission, in fact, supports clarification given in Clause 3.3 of the Central Excise Manual, Chapter 3, Part V, reproduced above. It appears that PLA account was debited by the petitioner on 31-1-2007 as sought by the respondents. It may be noticed that the argument of the respondents is contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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