By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether mere taking of CENVAT credit facility
without actually using it, would carry interest as well as penalty prior
to 17-03-2012? Held – No.
Facts
The respondent was
a manufacturer of fibre glass and some other products. During the
relevant period (prior to amendment in Rule 14 of CCR w.e.f.17-03-2012),
the respondent took CENVAT credit facilities erroneously and also
reversed the same before utilisation.The question of law raised before
the High Court was, whether a mere taking of CENVAT credit facility
without actually using it, would carry interest as well as penalty?
The
Department relied upon the decision of the Apex Court in the case of in
Union of India vs. Ind-Swift Laboratories Ltd. [2011] 30 STT 461/9
taxmann.com 282 (SC), wherein the Apex Court had held that, the mere
taking of credit would also entail interest and penalty.
Held
The
High Court observed that the said decision of the Apex Court was
subsequently considered in CCE & ST vs. Bill Forge (P.) Ltd. 2012
(26) STR 204 (Kar). The High Court also observed that, Rule 14 of the
CENVAT Credit Rules has been subsequently amended, wherein the
expression “taken or utilised” was substituted by “taken and utilised.”
Relying upon Bill Forge decision (supra), the High Court held that,
since the subsequent amendment has cleared all doubts existed earlier in
respect of Rule 14 of the said Rules, it is clear that, the mere taking
itself would not compel the assessee to pay interest as well as
penalty.
