Whether penalty and interest is payable on reversed credit which was taken on basis of various judgments of Tribunal.

PJ/Case Laws/2012-13/1518

Case:- M/S BASF INDIA LTD. V/S COMMISSIONAR OF SURAT EXCISE , SURAT-II

Citation:-2013-TIOL-468-CESTAT-AHM

Brief Facts:-The facts of this case in brief are that during the course of audit it was noticed that assessee has taken wrong Cenvat credit of Rs. 93,195/- on ineligible input services and when it was pointed out, assessee reversed the credit taken but refused to pay any interest. The adjudicating authority confirmed the denial of wrongly availed credit and appropriated the amount paid by the assessee. However proposal of demand of interest and imposition of penalty was dropped by original adjudicating authority. The department filed an appeal before the Commissioner (A) who in the impugned order has confirmed the demand for interest and also imposed penalty equal to the amount demanded under Sec. 78 of the Finance Act, 1994 read with Sec.11AC of the Central Excise Act, 1994 and Rule 15 of the Cenvat Credit Rule, 2004. It is against this order that assessee has filed appeal to the Tribunal.

Appellant’s Contention:-The ld counsel on the behalf of the appellant submitted that such credit has been taken for maintenance of wind mill and in the following decisions it has been held that such credit is admissible:-

· MaharashtraSeamless Ltd.-2011-TIOL-1059-CESTAT-MUM

· Endurance Technology Pvt. Ltd.-2011-TIOL-1045-CESTAT-MUM

Reasoning of judgement:- In this case the appellant did not contest the view taken by the revenue that credit was in admissible and therefore amount already reversed by them cannot be refunded when the matter has attained finality. At the same time credit itself does not become inadmissible just because the appellant has reversed the credit taken. It was also noticed that there were decisions favouring assessees pronounced by Tribunals and therefore penalty was set-aside. The ld AR even though presented very detail argument as to why the interest is not payable when the credit itself was not utilized , it was proposed instead of going into detail discussion of several cases and decision to consider issue, since the amount is very small, the appellant may not contest issue. The ld advocate agreed and according the demand of interest is upheld in view of the consent given by ld advocate to make payment as the amount of interest payable is small.
In view of the above discussion, demand for interest is upheld by consent and penalty is set-aside.

Decision:-Appeal disposed of.

Comment:- The analogy drawn from this case is that when there are decisions favouring the contention of the assessee by various Tribunals on the issue that credit can be taken on the maintenance of wind mills, penalty is not imposable as the assessee is said to have bonafide belief.

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PJ/Case Laws/2012-13/1518

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