Inputs used in dutiable and exempted goods - retrospective amendments in FA 2010 – interest @ 24%?
THE Finance Act, 2010 provided for proportionate reversal of CENVAT Credit on inputs used in exempted and dutiable goods. But the Act also provides for payment of interest @24% from the date of clearance till the date of payment.
A Netizen asked us a doubt. - “Now a doubt arises with regard to the past cases where in the party has paid /reversed credit attributable to exempted goods along with interest at 13% . Now is he required to pay additional interest of 11% to settle/close the issue in terms of retrospective amendments. Or can the adjudicating authorities decide the cases by dropping further proceedings in past cases without insisting payment of additional interest.”
Many Departmental officers feel that differential 11% interest is payable. This will now lead to another round of litigation. Board should immediately clarify this issue and avoid unnecessary litigation. In any case Courts are of the consistent view that once credit is reversed, it is as good as not taking credit.