Order Date – 08 June 2023

Parties: M/s. National Aluminium Company Limited Vs Commissioner of Central Excise & Service Tax, Bhubaneswar-I

Facts –

• The Appellant, M/s. National Aluminium Company Limited, had inadvertently taken CENVAT Credit on duty paid documents twice. On realising its mistake, the Appellant suomoto reversed such credit taken by it.
• The Ld. Adjudicating authority observed that although the Appellant has reversed the excess credit taken, it had utilized the same and thus, failed to pay appropriate interest chargeable thereon.

Issue –

• Whether interest is payable on reversal of CENVAT credit?

Order –

• The Tribunal 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 Union of India vs. Ind-Swift Laboratories Ltd. [2011 (265) ELT 3 (SC). Which was held that in case the Cenvat credit taken is not utilized, no interest liability would arise.
• Further Hon'ble Punjab & Haryana High Court in the case of CCE Vs. Maruti Udyog Ltd., 2007 (214) E.L.T. 173 (P & H) held that the assessee is not liable to pay interest as the credit was only taken as an entry in the Modvat record and was not in fact utilized. Against the decision, the Special leave to Appeal (Civil) No. CC3915/2007 filed by Revenue, was rejected by the Hon'ble Supreme Corut [2007 (214) E. L. T. A50 (S.C.)].
• Thus, in light of the substitution of Rule 14 of the CENVAT Credit Rules, the intention of legislature, not to impose interest where credit has only been taken but has not been utilized, is duly evident. 
• It was held that since the Appellant had sufficient credit balances as noted above, there would be no loss of Revenue to the exchequer. Therefore, the imposition of interest in the present proceedings cannot sustain and hence, the impugned orders are set aside.