By TIOL News Service

MUMBAI, OCT 20, 2014: THIS is a Revenue appeal filed in the year 2004.

The brief facts are that the respondent is engaged in the manufacture of excisable goods such as parts of motor vehicles and parts of forklift. In the month of June, 2000, the respondent received capital goods (dies and gauges) from M/s Fiat India Ltd., Kurla under two invoices, both dated 1.6.2000, involving the total duty of Rs.45,76,685/-. As per the CCR, the respondent took CENVAT Credit of 50% of the duty i.e. Rs.22,88,343/- on 3.6.2000 and took the balance credit of 50% on 1.4.2001 i.e. next financial year.

Later, it came to the notice of the Revenue that the supplier M/s Fiat India Ltd. had deposited only 50% of the duty on 15.6.2000 i.e. on the due date, and had deposited the balance 50% of the duty after a considerable delay on 24.1.2002.

Proceedings were initiated against the respondent and when the adjudicating authority concluded that they were liable to pay the interest on the amount of CENVAT Credit availed during the period 1.4.2001 to 24.1.2002.

In appeal, the Commissioner (Appeals)held that under Section 11AB of the CEA, 1944, interest is payable by the person/manufacturer who is liable to pay the duty. Inasmuch as since the respondent-assessee, in the facts and circumstances, is not liable to pay duty, there can be no demand of interest and accordingly allowed the appeal in its favour.

Unhappy with this order the Revenue, as mentioned, is before the CESTAT and the ground raised is that the respondent-assessee had been "careless" in taking the credit as it is evident from the face of the supplier's invoice thatthe column provided to record the manner of payment of dutywas left blank; that since the respondent-assessee was "negligent" in taking the credit of the CENVAT they are liable to pay interest.

The respondent submitted that duty at the material time was payable on fortnightly basis and not at the time of clearance of the goods and there is no obligation cast on receiver of the goods to monitor the payment of duty by the manufacturer clearing the goods; that the contention of the Revenue is untenable and their appeal is fit to be rejected.

The CESTAT after considering the rival contentions held that the Commissioner (Appeals) had rightly held that interest is payable by the person who is responsible and is liable to pay the duty.

After affirming the order of the Commissioner (Appeals), the Revenue appeal was dismissed.

(See 2014-TIOL-2038-CESTAT-MUM)