Cenvat credit taken by mistake but not utilized

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Amisha Bhatt (Querist)
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07 December 2015 Hello, We had under genuine belief taken the cenvat credit on a certain invoice in 2012. HOwever during our Audit in Nov 2015, it was said by officer that the credit has been wrongly taken and must be reversed along with penalty and interest. Although we had taken the credit by mistake, the same was never utilized to make the payment of service tax until Jan 2015 as we already had enough closing balance as per our returns. Thus in such a case is interest applicable and if yes from when would it be - from July 2012 or Jan 2015. Also would penalty be applicable? Many thanks in advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 December 2015 Interest applicable from Jan 2015.

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Amisha Bhatt

Amisha Bhatt (Querist)
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07 December 2015 Dear Sir. Thank you very much for the prompt reply. HOwever can you also confirm which rule or notification provides that interest is to calculated from the date of utilizing the credit.

Also request you to please clarify if penalty is also applicable and at what rate?

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 December 2015 Notification 18/2012 CE dt. 17/03/2012.
No penalty on reversal of wrongly availed credit on bona fide transactions, as stated in Ahmedabad CESTAT decision.

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Cenvat credit taken by mistake but not utilized

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