By TIOL News Service

CHENNAI, DECEMBER 05, 2018: REVENUE is in appeal and raises the following substantial question of law:

"The Tribunal being creation of the Statute, whether it can traverse beyond the provisions of the CENVAT Credit Rules, 2004, when the same has the force of a Statute?"

The issue is with regard to demand of interest on the ineligible credit availed by the assessee.

The Division Bench observed that the said issue is no longer res integra inasmuch as it has been decided in favour of the Revenue in the case of  CCE Vs. M/s Sundaram Fastners Limited  =  2014-TIOL-201-HC-MAD-CX and wherein the argument of the assessee that since the credit had been reversed before utilizati on, the same did not amount to taking credit and, therefore, no interest is payable was rejected on the ground that rule 14 unambiguously warrants payment of interest.

The High Court, therefore, held that the finding rendered by the Tribunal with regard to levy of interest called for interference.

The counsel for the Revenue further contended that Rule 6(3AA) of the CCR, 2004 would have no application to the facts of the case.

In this matter, the High Court observed -

“7. We refrain ourselves from expressing any opinion at this juncture, since the Tribunal remanded the matter to the Adjudicating Authority for de novo consideration to arrive at the net liability of the assessee after calculating the same in terms of Rule 6(3AA) of the said Rules. Since jurisdictional issue has also been raised by the Revenue, the Adjudicating Authority shall also consider the submissions of the Revenue as regards applicability of Rule 6(3AA) of the said Rules during de novo consideration.”

The appeal filed by the Revenue was allowed.