Order Date – 23 April 2024

Parties: M/s. Ambika Cotton Mills Ltd. (Unit – IV) Vs Commissioner of GST & Central Excise

Facts –

• The Appellant, M/s. Ambika Cotton Mills Ltd. (Unit – IV), are manufacturers of cotton yarn, was alleged that they had not reversed the proportionate input credit relating to the exempted goods cleared every month properly and the appellant reversed the ineligible CENVAT. However, the appellant did not pay the interest on the wrongly availed CENVAT credit.
• A show cause notice was issued to recover the interest along with penalty and the same were confirmed.

Issue – 

• Whether interest is leviable upon reversal of ineligible CENVAT?

Order –

• The Tribunal observed that under the Hon’ble High Court of Karnataka in Bill Forge (P.) Ltd. has examined the judgment of the Hon’ble Supreme Court in Ind-Swift Laboratories Ltd. and  distinguished the same. The Hon’ble High Court held that when the assessee has not taken the benefit of the CENVAT credit, there is no  liability to pay interest. Once the credit entry was reversed, it is as if the CENVAT credit was not available.
• In the light of the law as stated in the judgment no interest is payable in the circumstances and the question of imposition  of a penalty does not arise. The impugned orders are hence set aside, and the appeals are allowed.