CAG has no respect for Supreme Court
Here is a sample from the CAG's 2009 Report to Parliament:
3.2 Rule 4(2)(a) and (b) of the Cenvat Credit Rules, 2004 enunciates that cenvat credit in respect of capital goods received in the premises of the provider of output service at any time in a financial year shall be taken only for an amount not exceeding fifty per cent of the duty paid on such capital goods in the same financial year and the balance 50 per cent credit may be taken in any subsequent financial year. Rule 14 of the said rules provide that where the cenvat credit has been taken or utilised wrongly, the same alongwith interest shall be recovered.
3.2.1 M/s Bharti Airtel Ltd., in Hyderabad II Commissionerate, engaged in providing cellular phone services procured capital goods during the period from October 2006 to March 2007 and took full credit of Rs. 40.50 crore during 2006-07 on such capital goods even though they were eligible for taking credit only to the extent of Rs. 20.25 crore being 50 per cent of the duty paid. The excess credit of Rs. 20.25 crore taken by the assessee was recoverable along with interest of Rs. 58.32 lakh .
On this being pointed out (January 2008), the department accepted the audit observation and reported (May 2008) that the assessee had paid Rs. 20.25 crore . The department further stated (May 2008) that the assessee had not utilised the excess availed credit, charging of interest on the credit lying unutilised was not warranted in view of judicial decisions of Punjab and Haryana High Court {2007 (214) ELT 173} = [] which was upheld by the Supreme Court also {2007 (214) ELT – A 50}.
The reply of the department was contrary to the provisions of rule 14 of the Cenvat Credit Rules, which stipulated charging of interest where cenvat credit had been taken wrongly. Further, the anomalous situation which had cropped up due to above judicial pronouncements needs to be remedied by making the relevant provisions more explicit and unambiguous, as otherwise the provisions of the said rule with regard to recovery of interest were not enforceable in any case even though the assessees commit breach of the provisions by taking 100 per cent instead of 50 per cent credit on capital goods in the year of their procurement.