Order Date – 30 April 2024 

Parties: M/s. Bharat Sanchar Nigam Limited Vs Commissioner of GST and Central Excise

Facts –

• The Appellant, M/s. Bharat Sanchar Nigam Limited, was found to be availed the entire CENVAT credit of capital goods instead of 50% as stipulated under Rule 4(2)(a) of CCR,2004. Further it was noticed they have availed ineligible CENVAT Credit on Customs cess and also availed credit based on invoices addressed to BSNL (Access Network Project), Ganapathy, Coimbatore holding separate Service Tax registration as well as credit based on invoices from the Input Service Distributor BSNL, Salem, and invoices from BSNL (Access Network Project), Ganapathy, Coimbatore.
• A Show Cause Notice dated 30.09.2013 was issued to the Appellant proposing to recover the said wrongly availed CENVAT Credit along with applicable interest and penalty.

Issue –

• Whether interest is demandable on irregular CENVAT Credit merely taken in the books but have not been utilized?

Order –

• The Tribunal observed that On the issue of 100% availment of CENVAT Credit on capital goods in the first year itself and the availment of credit on Customs Cess, it is to be noted that the appellant though has taken the credit in their books has not utilized the credit taken towards payment of any duty / tax. Whether interest is demandable or not on irregular CENVAT Credit availed but not utilized, the issue is no more res integra as it has been held by various higher judicial fora that when CENVAT Credit was merely taken in the books but not utilized would not involve any payment of interest or penalty.
• On the second issue of the appellant taking CENVAT Credit on ineligible documents, contravening the provisions of Rule 9 of the CENVAT Credit Rules, 2004, the appellant is a Government owned company and it has got different circles, operational areas and divisions, as such discrediting these documents for the purpose of availment of CENVAT Credit is not legal and proper. Unless there is an allegation that the capital goods are diverted or not installed in the appellant's premises, it has to be held that the appellant is eligible for the CENVAT Credit availed.
• Further held that that the demand notice issued is time barred and there is no justification for invoking the extended period of limitation in the facts of this case. Thus, the appellant succeeds on limitation also. The appeal is allowed.