INTERNATIONAL FLAVOURS Vs. CCE

JUDGEMENT

(1.) M /s. International Flavors and Fragrances India Ltd., (IFFL) are engaged in the manufacture of flavoring essences and aromatic compounds. They avail cenvat credit of duty paid on inputs and capital goods. Inspection of records of the assessee revealed that it had destroyed credit availed inputs rejected on the basis of poor quality during the period 2000 -2004. IFFL, hence reversed cenvat credit to the tune of Rs. 3,82,441/ - by way of debit in PLA on 26.03.05. Vide order in original dated 24.04.06, the Assistant Commissioner of Central Excise, Guindy Division, demanded an amount of Rs. 2,80,523/ - from the assessee as per Rule 14 of CCR, 2004, read with Section 11AB of the Central Excise Act, 1944. She took the view that the impugned credit was initially taken wrongly and therefore interest was demandable till the reversal of the credit in terms of Rule 14 of CCR, 2004. In the impugned order, the order of the Assistant Commissioner has been upheld.

(2.) THE subject application seeks waiver of predeposit and stay of recovery of the interest demanded till the disposal of the captioned appeal filed against the impugned order. After hearing both the parties on the stay application, the same is dismissed and the appeal itself is taken up for disposal. It is submitted that the original order had been passed without following the principles of natural justice. Relying on case law it is argued that no interest is liable to be paid by the appellants as it had paid the interest due before issue of Show Cause Notice. It is prayed that the demand of interest may be vacated.

(3.) I find that the appellant had destroyed the credit availed inputs on finding it to be of substandard quality. Therefore, it was not eligible for the said credit as the inputs were not used in relation to the manufacture of finished goods. Rule 14 of CCR reads as follows: