By TIOL News Service

MUMBAI, OCT 06, 2016: THE appellant had sought refund claim of the unutilized amount of CENVAT credit lying in their account in July 2009. This credit remained unutilized as appellant had exported the goods manufactured out of input/input services on which CENVAT credit was availed.

The said refund was sanctioned by orders dated 24.05.2010 and 27.07.2010 and the cheques were issued for the amounts of Rs.64,89,944/- and Rs.19,57,736/-.

However, the Appellant deposited the cheques in the bank for realization on 26.08.2010.

Revenue did not like this unwarranted delay in depositing the cheques.

It is the case of the Revenue that since the appellant had received cheques on 28.05.2010 and 29.07.2010 from Govt. of India, it was mandatory on the part of the appellant to reverse the equivalent CENVAT credit as soon as the refund sanction order is received & such delay in reversal of CENVAT credit attracts interest as well as penalty.

The lower authorities upheld the allegation leveled in the SCN and, therefore, the appellant is before the CESTAT.

The Bench was not impressed with the findings recorded.

It was observed thus -

++ There is no provision in the Cenvat Credit Rules, 2004 which requires the appellant-assessee to reverse the CENVAT credit against the receipt of refund order. There is also no provision which mandates for demand of interest for late deposit of the refund cheques given to an assessee. In the absence of any such provision, demand of interest from the appellant for the period from the date of issue of cheque till the date of deposit for non reversal of CENVAT credit seems inconsistent with law.

The appellant also clarified to the Bench that during the interregnum period the assessee had not utilized the CENVAT credit for paying any duty on the clearance of the goods and was reversed as soon as the cheque was deposited in their bank.

In fine, the impugned order was set aside and the appeal was allowed.

(See 2016-TIOL-2630-CESTAT-MUM)