LAFARGE INDIA PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant filed this appeal against denial of credit on welding electrodes and recovery of interest under Section 11AB of the Central Excise Act, 1944 read with Rule 12 of the Cenvat Credit Rules 2001/2002. The Adjudicating Authority disallowed credit on welding electrodes used for repair and maintenance and imposed penalty of Rs. 1,00,000.00 under Rule 13 of Cenvat Credit Rules 2001 -2002 along with recovery of interest. Commissioner (Appeals) set aside the penalty but upheld the denial of credit and recovery of interest.

(2.) THE learned advocate on behalf of the appellant submits that the Hon'ble Rajasthan High Court in the case of CCE, Jaipur v. Neer Shree Cement Ltd. Excise reference No. 9 of 2002 dated 08/8/03 rejected the reference application filed by the revenue against admissibility of credit on welding electrodes. He further submits that in any event, the appellant had taken the credit but not utilized and therefore recovery of interest is not justified. In this connection, he relied upon the decision of the Hon'ble Punjab and Haryana High Court in the case of CCE, Delhi -III v. Maruti Udyog Ltd. as reported in 2007 (81) RLT 804 (P&H) which was upheld by the Hon'ble Supreme Court as reported in 2007 (214) E.L.T. A50. He also submits that the Hon'ble Supreme Court in the case of CCE, Mumbai -I v. Bombay Dyeing and Mfg. Co. Ltd. 2007 (82) R.L.T. 117 (SC) held that credit has been reversed before utilization, which amounted to not taking credit. He further submits interest is compensatory character as held by the Hon'ble Supreme Court in the case of Pratibha Processors v. Union of India

(3.) THE learned DR on behalf of the revenue submits that the Larger Bench of the Tribunal in the case of Jaypee Rewa Plant v. CCE, Raipur as reported in 2003 (159) E.L.T. 533 (Tri. - LB) disallowed credit on welding electrodes used for maintenance and repairing purpose. Regarding recovery of interest, he submits that the case laws cited by the learned advocate are under Rule 57(I) of the erstwhile Central Excise Rules, 1944. He submits that the present case relates to Rule 12 of Cenvat Credit Rules 2001/02, wherein it is categorically specified that Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer. He submits that Rule 12 particularly indicates for recovery interest when Cenvat credit taken wrongly, which was not mentioned in Rule 57(I) of the erstwhile Central Excise Rules. He submits that the appellant is liable to pay interest for taking of the credit even it was not utilized by them.