Cenvat credit

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Karthik.T (Querist)
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14 October 2011 Cenvat credit on input goods wrongly availed as credit on capital goods. That is 50% credit only availed but not utilized. Subsequently this mistake has been rectified. Whether the dealer is liable for interest for wrong availment of credit?

U S Sharma

U S Sharma (Expert)
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14 October 2011 period of default is needed to reply
if the mistake is found in very next month, and corrected without utilization of duty, then no issue at present, provided you keep documentary records for reconcilation of same at the time of audit.

Maninder Jain

Maninder Jain (Expert)
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15 October 2011 We need to understand the difference between "wrong" vs "mistake". While the word "wrong" presumes guilty state of mind, the word "mistake" does not presume. What you have commited is "Mistake" not wrongly availed cenvat.
Cenvat was eligible on your invoice. You have by mistake put it in RG23C instead of RG23A.
Even here if you had guilt in mind you take "Capital Credit" in input & thereby take the balance 50% in first year itself.
But your case is opposite.
First self rectify mistake. if in audit any question is put, explain these facts, I suppose no problem at all in your case.

CA Deepak S

CA Deepak S (Expert)
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19 October 2011 If you have shown the details of wrongly availed cenvat credit in your returns you will be liable for interest.

Rule 14 states that where the CENVAT credit had been taken or utilised wrongly or had been erroneously refunded, the credit along with the interest shall be recovered from the manufacturer or the service provider under the relevant provisions of Section 11AB of the Central Excise Act, relating to payment of interest.
The CBEC issued Circular No. 897/17/2009-CX dated September 3, 2009 to clarify that interest would be recoverable from the date of availment of credit even if the credit has not been utilised. This contradictory circular had created a fair degree of concern and the matter has been addressed by the Supreme Court in the case of Union of India Vs M/s Ind-Swift Laboratories Ltd. (2011-TIOL-21-SC-CX) and decided that interest would be payable from the date of wrong availment of cenvat credit

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