CENVAT credit of duty paid on Capital goods taken of 100% in first year itself - what is recoverable is interest on such wrongly availed credit from date of taking credit till the end of Financial Year: CESTAT
THE appellant is a PSU oil giant. Instead of availing 50% CENVAT credit of the duty paid on capital goods in the year of receipt, they availed the full credit. They also took CENVAT credit of Rs.14,42,690/- on various items which they reversed subsequently and they are not disputing the inadmissibility of the said credit.
SCN was issued invoking extended period of time and demands were confirmed by denying 50% of the credit and also the CENVAT credit of Rs.14.42lakhs which the appellant had taken incorrectly.
Before the CESTAT, the appellant while accepting the allegations levelled of CENVAT credit incorrectly availed of Rs.14.42 lakhs (Rs.8900/- being disputed as that availed on Welding rods) submitted that in the matter of pre-mature availment of credit on Capital goods in the first year itself, since the appellant is eligible for taking CENVAT credit of the balance 50% in the subsequent year, therefore, what is liable to be paid by them is only interest on 50% of the credit taken in advance and not reversal of the amount per se. It is also submitted that being a PSU, suppression cannot be alleged.
The Revenue representative fairly agreed with the appellants' submission regarding "interest only" payment but pleaded that the appellant be put to terms.
The Bench observed -
"5. After careful consideration of the submissions made by both the sides and in view of the admitted position that the appellant has taken credit on capital goods wrongly, which was not due to them in the first year, the appellant is liable to pay interest on such credit wrongly availed from the date of taking of the credit till the end of the financial year. According to the learned counsel, the interest liability would be approximately Rs.3.25 lakhs. Similarly, on the wrongly availed credit of Rs.14.42 lakhs, the interest liability would be approximately Rs.3 lakhs."
In fine, the CESTAT directed the appellant to make a pre-deposit of Rs.6.25 lakhs being the interest component and report compliance for obtaining stay.