UNION OF INDIA & ORS versus M/S. IND-SWIFT LABORATORIES LTD

Citation: [2011] 2 S.C.R. 1087 · Decided: 21-02-2011 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2011) 2 S.C.R. 1087 
UNION OF INDIA & ORS. 
V. 
M/S. IND-SWIFT LABORATORIES LTD. 
(Civil Appeal No. 1976 of 2011) 
FEBRUARY 21, 2011 
[DR. MUKUNDAKAM SHARMA AND 
ANIL R. DAVE, JJ.] 
CENVAT CREDIT RULES, 2004: 
A 
B 
c 
Rule. 14- Interest on CENVA T credit wrongly availed -
Held: Interest would be payable from the date of availment of 
CENVAT credit and not from the date of utilization - High 
Court wrongly proceeded by reading down the provisions of 
Rule 14 to mean that where CENVAT credit has been taken D 
'and' utilized wrongly, interest should be payable from the date 
the credit has been utilized wrongly - If the provision is read 
as a whole, there is no reason to read the word "or" in between 
the expressions 'taken' or 'utilized wrongly' or 'has been 
erroneously refunded' as the word "and" - On the happening 
E 
of any of the three events, CENVAT credit becomes 
recoverable with interest ....; Interpretation of Statutes -Rule of 
reading down - Central Excise Act, 1944-s. 11-AB. 
Central Excise Act, 1944: 
F 
s.32-M read with s.32-F(l)- Order passed by Settlement 
Commission- Finality of-Held:- An order passed by the 
Settlement Commission could be interfered with only if the 
said order is found to be contrary to any provisions of the 
Act-So far as findings of fact recorded by the Commission 
G 
or questions of fact are concerned, the same is not open for 
examination either by High Court or by Supreme Court-
. Judgments/orders. 
1087 
H 
1088 
SUPREME COURT REPORTS 
[2011] 2 S.C.R. 
A 
INTERPRETATION OF STATUTES : 
Tax statutes - Held: Must be interpreted in the light of 
what is clearly expressed - It is not permissible to import 
provisions in a tax statute so as to supply any assumed 
8 deficiency - Rule of reading down - Explained. 
The Revenue filed the instant appeal challenging the 
order of the High Court whereby it interfered with the 
order dated 31-05-2007 passed by the Settlement 
Commission on an application for clarification of its final 
C order dated 19-01-2007 directing the assessee to pay 
interest on the CENVAT credit availed by it wrongly, from 
the date of availment of CENVAT credit and not from the 
date of utilization of a part of balance of such credit, and 
held that provisions of Rule 14 of the CENVAT Credit 
D Rules, 2004 would be read down to mean that where 
CENVAT credit was taken and/or utilized wrongly, interest 
would be payable on CENVAT credit from the date the 
said credit had been utilized wrongly. The High Court 
further held that on a conjoint reading of s.11-AB of the 
E Central Excise Tariff Act, 1944 and Rules 3 and 4 of the 
Credit Rules, interest could not be claimed from the date 
of wrong availment of CENVAT credit but would be 
payable from the date CENVAT credit was wrongly 
utilized. 
F 
Allowing the appeal, the Court 
HELD: 
1.1 A bare perusal of the order of the Settlement 
G Commission would indicate that It Imposed the liability of 
payment of simple interest only@ 10 per cent per annum 
on CENVAT credit wrongly availed, from the date the duty 
became payable. Incidentally, imposition of such simple 
interest at 10 per cent per annum was the minimum, 
H whereas levy of interest at 36 per annum was the highest 
UNION OF INDIA v. IND-SWIFT LABORATORIES LTD.1089 
in terms of the s.11-AB of the Central Excise Act, 1944. 
A 
Besides, the allegations made in the show cause notfoe 
were admitted by the respondent which, therefore, 
establishes that the respondent had taken wrongful 
CENVAT credit from the year 2001 to 31.03.2006 and the 
payment was made only on 22.02.2006 and on five 
B 
different dates in March, 2006 and on 20.11.2006, which 
. indicates that the respondents had the benefit of availing 
the large amount of CENVAT credit to which they were 
otherwise not entitled. [Para 12] [1098-B-D] 
1.2 The order of the Settlement Commission also C 
indicates that full immunities were granted to the 
respondent from penalty and prosecution. The order was 
not challenged by the respondent in any forum and, 
therefore, it became final and conclusive in terms of s.32M 
of the Act, which states that every order of settlement D 
passed under sub-s. (7) of s.32F woul~ be conclusive as 
to the matters stated therein subject to the condition that 
when a settlement order is obtained by fraud or 
misrepresentation of fact, such an order would be void. 
According to the said provisions, no matter covered by 
E 
such order could be reopened in. any proceeding under 

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