Cenvat Credit Availment Precedes Its Utilisation
If Cenvat credit is availed wrongly taken, then it will be an independent liability by itself irrespective of its utilisation which may have followed, as far as taxing statutes are concerned. This has been held by High Court of Chattisgarh in matter of Commissioner Of C. Ex. & Cus., Raipur Versus Vandana Vidyut Ltd.-2016 (331) E.L.T. 231 (Chhattisgarh).
RULE 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. – 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 service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.”
The High Court while dealing with Rule 14 of Cenvat Credit Rules,2004 observed as below
7.We may profitably refer to Ind-Swift Laboratories Ltd. (supra) with regard to manner for interpretation for taxing statutes observing as follows :-
“19. A taxing statutes must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statutes so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows :-
“10. …… In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statutes and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency”.”
9. The aforesaid consideration takes it beyond the ambit of any controversy that under Rule 14, even if the Cenvat credit was taken by making paper entries by one not entitled to the same, the liability for interest arises irrespective of its reversal before utilization. The conclusion of the Tribunal that the Cenvat credit having remained a paper entry only liability for interest would not arise in absence of utilization was thus clearly erroneous.
10. The fact that the liability would arise from wrong taking of Cenvat credit by making entries and that utilisation was the second step thereafter which was not required to be necessarily fulfilled for the liability of interest becomes apparent from the following passage :-
“20. Therefore, the attempt of the High Court to read down the provision by way of substituting the word “OR” by an “AND” so as to give relief to the assessee is found to be erroneous. In that regard the submission of the counsel for the appellant is wellfounded that once the said credit is taken the beneficiary is at liberty to utilize the same, immediately thereafter, subject to the Credit rules.”
11. In other words, the taking of Cenvat credit precedes the utilisation. If Cenvat credit had been wrongly taken, that is an independent liability by itself irrespective of its utilisation which may have followed, as far as taxing statutes are concerned.
12. Since Learned Counsel for the Respondent has heavily relied upon Bill Forge Pvt. Ltd. (supra), we consider it proper to discuss the same also even though it is not binding on us. We regret our inability to concur with the discussion in paragraph 22 of the same that the mere taking of Cenvat credit wrongly by making entries would not invite liability for interest unless it had been utilised also. In our respectful opinion, that would be against the discussion and the law laid down in Ind-Swift Laboratories Ltd. (supra) that the liability for interest arises on the wrong taking independent of utilisation.