Whether mere taking of CENVAT credit facility without actually using it, would carry interest as well as penalty prior to 17-03-2012

CCE vs. Strategic Engineering (p.) Ltd. [2014] 45 taxmann.com 541 (Madras)

?

FACTS

The respondent was a manufacturer of fibre glass and some other products. During the relevant period (prior to amendment in Rule14 of CCR w.eJ.17-03-2012), the respondent took CENVAT credit facilities erroneously and also reversed the same beforeutilisation. 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

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 observer 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 ofthe said Rules, it is clear that, the mere taking itself would not compel the assessee to pay interest as well as penalty.