Commr. of C. Ex. and Cus. vs M.J. Pharmaceutical Indus. Ltd.

H.N. Devani, J.—Appellant-revenue has challenged order dated 5-3-2009 [2009 (240) E.L.T. 712 (Tribunal)] made by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) proposing the following question:

Whether, in the facts and circumstances of the case, CESTAT is justified in holding that interest is not required to be paid when there is express provision in Rule 14 of the Cenvat Credit Rules, 2004, to the effect the interest is required to be paid in instances where cenvat credit has been taken wrongly?

The facts stated briefly are that during the course of audit it was observed that the respondent availed Cenvat credit of Rs. 7,01,682/- on capital goods, during March, 2006 to March 2007, which were not used in or in relation to manufacture of finished goods. On being pointed out by the audit, the respondent voluntarily debited/reversed the wrongly availed Cenvat Credit. However, the respondent did not pay interest of Rs. 53,712/- thereon. Similarly, it was observed that the respondent had availed cenvat credit on the strength of invalid documents and taken Cenvat Credit totally amounting to Rs. 46,399/-. On being pointed out by the audit, the respondent debited/reversed the wrongly availed Cenvat Credit. However, interest of Rs. 32,758/- was not paid thereon. Accordingly, two show cause notices came to be issued for recovery of interest of Rs. 53,712/- and Rs. 32,758/- respectively on the wrongly availed Cenvat Credit which came to be confirmed vide order dated 22-5-2008 made by the adjudicating authority who ordered payment of interest in terms of Rule 14 of the Cenvat Credit Rules, 2004 (the Rules) read with Section 11AB of the Central Excise Act, 1944. The adjudicating authority found that the statement of closing balance Cenvat Credit in the accounts of RG-23A, Part-II, RG-23C-II and Service Tax at the end of each month during 2006-2007 show that the respondent did not have any balance in the RG 23C, Part-II account right from July, 2006 to March, 2007. That is why the assessee could not reverse the credit on the same date as audit and reversed the same on later dates. According to the adjudicating authority this substantiated that the assessee had utilized the wrongly availed credit of Rs. 7,01,682/- out of the RG 23C Pt-II account. Therefore the plea of the assessee that it had not utilized the wrongly availed Cenvat Credit was not tenable. In respect of Cenvat Credit of Rs. 46,393/- the adjudicating authority held that at the end of November, 2005 and December, 2005 the assessee had only Rs. 1,979/- in balance. The respondent challenged the order of the adjudicating authority before Commissioner (Appeals) contending that the wrongly availed Cenvat Credit had not been utilized by them as there was sufficient balance available in their Cenvat Credit account right from the date of taking the said credit till the date(s) of its reversal. Commissioner (Appeals) allowed the appeals and set aside the order-in-original. The revenue carried the matter in appeal before the Tribunal but did not succeed.

Learned Standing Counsel for the appellant-revenue has invited attention to the provision of Rule 14 of the Rules to submit that the same provides that where Cenvat Credit has been taken or utilized wrongly or has been erroneously refunded, interest is required to be recovered from the manufacturer or the provider of output service. It is submitted that the said provision does not provide that the credit which has been taken is also required to be utilized for the purposes of invoking the said provisions.

As can be seen from the order made by the adjudicating authority, the adjudicating authority has accepted that in all the decisions, on which reliance had been placed by the assessee, the Tribunal had clarified that the interest was not recoverable if the wrongly availed credit was not utilized. However, in the light of the findings recorded by him, that the statement of closing balance Cenvat Credit in the accounts of RG-23 A, Part-II, RG 23C-II and Service Tax at the end of each month during 2006-2007 showed that the assessee did not have any balance in the RG-23C, Part-II right from July, 2006 to March 2007, the adjudicating authority held that the assessee was liable to pay interest as demanded in the show cause notice.

A perusal of the order of the Commissioner (Appeals), shows that Commissioner (Appeals), upon appreciation of the evidence on record, has found as a matter of fact, that during material period the assessee had maintained sufficient balance in its Cenvat Credit account, which was much higher than the wrongly availed credit which showed that the wrongly availed Cenvat Credit was not utilized at any stage.

The Tribunal, after appreciating the evidence on record has concurred with the findings of fact recorded by Commissioner (Appeals). Thus, the conclusion arrived at by the Tribunal is primarily based upon concurrent findings of fact recorded by both Commissioner (Appeals) as well as the Tribunal. Whether such Cenvat Credit is utilized or not is primarily a question of fact. Nothing has been brought on record to disprove concurrent findings of fact recorded by two appellate authorities. Learned Counsel for the appellant is not in a position to point out that the Tribunal has considered any irrelevant material or that any relevant material has been ignored. In the circumstances, the conclusions arrived at by the Tribunal being based solely on findings of fact recorded by it do not give rise to any question of law so as to warrant interference.

In absence of any infirmity in the impugned order of the Tribunal, it is not possible to state that the same gives rise to any question of law, much less a substantial question of law. The appeal is accordingly dismissed.