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MRF Ltd. v. Commissioner of Central Excise, Cochin - (Customs, Excise and Service Tax Appellate Tribunal) (08 Aug 2016)

Interest and penalty not imposable where credit wrongly availed, reversed prior to utilization



Issue involved was relating to liability to pay interest on cenvat credit availed by Appellant but not utilized and reversed subsequently. In present case, Appellant is manufacturer of tyres, tubes, flaps and compounded rubber. Appellants were availing credit of duty paid on inputs and capital goods for payment of duty on finished goods under provisions of Cenvat Credit Rules. They have also availing benefit of DEPB scheme for selected inputs and capital goods under Notification 45/2002 Cus. : MANU/CUST/0011/2002  dated 22nd April, 2002. Appellant imported certain goods under DEPB scheme by debiting duty leviable on goods i.e. CVD component in Duty Entitlement Pass Book. Appellant declined to pay interest under applicable Cenvat Credit Rules read with Section 11AB of Central Excise Act, 1944. Thereafter, a show-cause notice was issued and demand of interest on wrongly taken cenvat credit was confirmed. Appellant’s appeal was also dismissed by Commissioner (Appeals).

Issue involved in present case is no more res integra and settled in favour of Appellant by a decision of Karnataka High Court in case of CCE & ST., LTU, Bangalore Vs. Bill Forge Pvt. Ltd. and also in case of CCE wherein, following decision in case of M/s. Bill Forge Pvt. Ltd., it was held that interest and penalty is not imposable where credit wrongly availed has been reversed prior to utilization. Since, Appellant had merely availed credit and reversed same before utilizing availed credit for remittance of duty, interest liability would not arise.

Further, this issue has been settled by larger Bench of this Tribunal in case of JK Tyre & Industries Ltd. following decision in case of Bill Forge Pvt. Ltd., therefore, impugned order was set aside. Allowing Appellant’s appeal, it is held that, no interest is demandable from Appellant and no penalty can be imposed.

Relevant : CCE & ST., LTU, Bangalore v. Bill Forge Pvt. Ltd. 2012 (2379) ELT 209 (Kar)]: [MANU/KA/1284/2011 Madurai v. Strategic Engineering (P) Ltd. 2014 (310) ELT 509 (Mad)]: [MANU/TN/3137/2014


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