COMMR.OF C. EX., BELGAUM Vs. VASAVADATTA CEMENT

JUDGEMENT

(1.) THE Revenue has filed this appeal against the Order -in -Appeal No. 24/2007 -C.E, dated 16 -1 -2007, passed by the Commissioner of Central Excise (Appeals), Mangalore.

(2.) IN this case, the Respondents availed 100% Cenvat credit on capital goods and spares instead of availing 50% of the total credit. This irregularity was noticed by the Preventive Officers. Since the lapse was pointed out, the Respondents reversed the credit. However, the Revenue proceeded against the Respondents by way of issue of show cause notice. The Original authority demand interest of Rs. 6,585/ - under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. He has also imposed penalty of Rs. 10,000/ - under Rule 15 of the Cenvat Credit Rules, 2004. The Respondents approached the Commissioner (Appeals). The Commissioner (Appeals) relying on the decisions of the Apex Court in case of M/s. Rashtriya Ispat Nigam Ltd. [2004 (163) E.L.T. A53 (S.C.)] and the High Court of Karnataka decision in case of M/s. Sri Krishna Pipes, held that the Respondents had paid the duty prior to the issue of show cause notice and therefore, the penalty and interest are not recoverable. The Revenue is highly aggrieved with the impugned order. It has been urged that there is no escape from the payment of interest because the credit had been irregularly taken and only when the Department pointed out the lapse, the same was reversed. Therefore during the period namely, from the date of availment of the credit to the date of reversal, the money has been held by the Respondents without authority of law. It was strongly contended that they are liable to penalty and therefore the impugned order of the Commissioner (Appeals) is not legal and proper.

(3.) THE learned Consultant stated that in order to charge the interest there should be determination of duty under Section 11A and in this case, there is no determination of duty at all and therefore no interest can be demanded under Section 11AB. He said that Rule 14 of the Cenvat Credit Rules is not independent and it should be read with Section 11A.