Ravi V. Malimath JUDGMENT
N. Kumar, J.
1. This appeal is by the revenue challenging the order passed by the Tribunal, setting aside the order passed by the lower authorities holding that the Assessee is liable to pay interest and penalty for taking the Cenvat credit wrongly.
2. The facts are not in dispute.
3. The Assessee is engaged in the manufacture of accessories of motor vehicles falling under Chapter Sub Heading 87081090 of Central Excise Tariff. They are registered under the Central Excise Act, 1944. They avail Cenvat Credit of duty paid on the inputs, capital goods and the taxable services used in the manufacture of final product. During the scrutiny of the ER 1 Return for the month of June 2007, it was observed that the Assessee had taken excess credit of Rs. 98,77,446-00 on capital goods. The said fact was pointed out to the Assessee. The Assessee by their letter dated 12.09.2007 admitted the wrong committed by them and informed the Revenue that they have reversed the same in September, 2007. They have over drawn only an amount of Rs. l1,691-00 in payment of Education Cess for the month of July 2007 and the interest liability calculated thereon at Rs. 184-00 has since been debited in their PLA account on 27.09.2007. A show cause notice was issued to the assessee calling upon them to show cause as to why they should not be levied interest and penalty for wrongful availment of Cenvat Credit. In reply thereto, they submitted that the mistake of taking excess credit has occurred only in the capital goods credit account and not in the other account, namely input credit and service tax credit. The availment of excess credit has not resulted in any over drawal in the credit account. Therefore no interest is payable on such wrongly availed credit. In view of the reversal of the credit and interest paid for the overdrawn amount, they requested for dropping of further proceedings. However the Assessing Authority held that the mistake is an intentional one, made with an intention of avoiding payment of duty and therefore they are liable to pay penalty. It also held that the interest is payable from the date of availment of the credit and accordingly issued a demand.
4. Aggrieved by the said order of the Commissioner, the Assessee preferred an appeal to the Tribunal. The Tribunal on reappreciation of the entire material on record held that when the Assessee had wrongly taken the credit to the extent of Rs. 98,77,446-00 in their CENVAT account without receipt of capital goods in June 2007 and the same was reversed in September 2007, there is no dispute that the Assessee had not utilized the said credit except to the extent of Rs. 11,691-00 towards education cess. The material on record does not give rise to a conclusion that the Assessee had taken irregular credit with an intention to avoid payment of duty. Therefore they held that imposition of penalty is unsustainable and accordingly set aside the said portion of the order. In so far as payment of interest is concerned, they relied on the judgment of the Punjab and Haryana High Court in the case of CCE Delhi v. Maruthi Udyog Ltd., (2007 (214) ELT A 50)) and held that as the Assessee had only made an entry in the records and actually not taken or utilized such credit, the question of payment of any interest would not arise. Therefore, the levy of interest was also set aside. Aggrieved by the said order, the Revenue is in appeal.
5. The learned Counsel appearing for the Revenue, assailing the impugned order contended that in view of the judgment of the Apex Court in the case of Union of India v. M/s Ind-Swift Laboratories Ltd., reported in 2011 TIOL-21-SC-CX, interest is payable once the credit is taken as the Assessee would be at liberty to utilize the same immediately thereafter subject to the Credit Rules and therefore the Tribunal committed a serious error in setting aside the levy of interest from the date of taking credit. He also contended that it is a clear case of taking the credit wrongly with an intention of avoiding payment of excise duty which attracts pen........