THE Supreme Court's decision in the case of Union of India v. M/s Ind-Swift Laboratories [2011-TIOL-21-SC-CX] has left everyone bewildered by ruling that interest is payable under Rule 14 of the Cenvat Credit Rules, 2004, on wrongful availment of Cenvat Credit and not utilisation of the credit so availed. The Apex Court arrived at this conclusion in an appeal filed by the Department against the decision of the Hon'ble Punjab & Haryana (P& H) High Court [ 2009-TIOL-440-HC-P&H-CX]. The P & H High Court took a similar view on the interest aspect in respect of Modvat Credit also, in the case of Maruti Udyog Ltd. [ 2006-TIOL-308-HC-P&H-CX]. It is worthy to take note that the SLP filed by the revenue against this decision was dismissed by the Hon'ble Supreme Court on 14.5.2007. With due respect to the Hon'ble Supreme Court's decision, the present article attempts to analyse Rule 14 vis-à-vis the above referred decisions in Ind-Swift Laboratories.
Rule 14 of the Cenvat Credit Rules, 2004 states, “ where the cenvat credit has been taken or utilized wrongly , or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output services and the provisions of Sec.11A and 11AB of the Central Excise Act and Sections 73 & 75 of the Finance Act, 1994 shall apply mutatis mutandis for effecting such recoveries.”
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