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The company, a manufacturer availed CENVAT credit on duty paid on material — Investigation indicated that CENVAT was taken on fake invoices — The company filed for settlement of proceedings — Paid entire duty/demand on wrongful availment. Consequently, appropriate interest liability under Rule 14 also was calculated by the revenue — The assessee contended that interest even if calculated cannot be from the date of availment of the credit but from the date of utilisation of the same — Held, No relief be given to the assessee — Interest be charged from the date of wrong availment — Orders passed by the Settlement Commission should not be intervened by High Court.
Facts:
The assessee-company was engaged in manufacture of bulk drugs, and availed CENVAT credit on the duty paid on inputs and capital goods. However, investigation conducted determined that such credits were availed on fake invoices and hence, duty was payable with interest. The duty was paid as directed by the settlement commission. However, the assessee objected to pay interest levied from the date of availment contending that interest if at all leviable, be levied from the date of utilisation. In short, interpretation of Rule 14 of the CENVAT Credit Rules, 2004 (Credit Rules) was the issue involved for determining the date from which the interest was leviable.
Held:
It was held that interest be levied from the date of availment of credit because once the credit is taken, the beneficiary is at liberty to utilise the same immediately thereafter, subject to rules. Also, it was held that the High Court had no authority to reject the order issued by the settlement commission and hence, the High Court should not have substituted its own opinion against the opinion of the Settlement Commission. As regards interpretation of Rule 14 of Credit Rules, the Apex Court observed that the High Court proceeded by reading down Rule 14 to interpret that interest cannot be claimed simply for the reason that CENVAT credit was wrongly taken, as such availment by itself does not create any liability of payment of excise duty. The Court further observed that it is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. Rules of reading down to be used for limited purpose of making particular provision workable and to bring it in harmony with other provisions of the statute. In the instant case, the attempt of the High Court is erroneous. The Revenue’s appeal was thus allowed.
