JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. Leave granted. The present appeal is directed against the judgment and order dated 03.07.2009 in Civil Writ Petition No. 13860 of 2007 passed by the Punjab & Haryana High Court, whereby the High Court while interfering with the order of the Settlement Commission regarding payment of interest on the CENVAT credit, has held that the appellants herein have wrongly claimed interest on the CENVAT credit, from the date when such credit was wrongly availed instead of the date when such credit was actually utilized. The High Court has further held that the appellants are not entitled to claim interest on the amount of Rs. 50 lacs up to 31.01.2007 as the said amount already stood deposited on 08.03.2006.

2. The respondent herein, viz., M/s. Ind-Swift Laboratories Ltd., is a manufacturer of bulk drugs, falling under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985. The company received inputs and capital goods from various manufacturers / dealers and availed CENVAT credit on the duty paid on such materials. On the basis of intelligence report, the factory premises of the respondent as also its group companies at different places were searched on 08.03.2006. Searches were also conducted at the offices of large number of firms in Ghaziabad and Noida which had allegedly issued invoices without any accompanying goods to the respondent and its group companies. At the same time the residential premises of Mr. R.P. Jain and Mr. J.P. Singh, the Brokers, were also searched and particularly during the course of search of the residence of Mr. R.P. Jain kachha ledgers / notebooks / files and cheques issued by the Swift group to the parties from whom invoices without material were being received, were recovered. It also appears that the appellant conducted investigations which indicated that the respondent had taken CENVAT credit on fake invoices.

3. Consequently, a show cause notice dated 08.12.2006 was issued to the respondent, to which a reply was also submitted by the respondent. The respondent company also filed applications for settlement of the proceedings and consequently the entire matter was placed before the Settlement Commission.

4. Before the Settlement Commission, it was an admitted position that the case pertained to the period from 27.10.2001 to 31.03.2006. The respondent company also admitted all the allegations and duty liability as per the show cause notice dated 08.12.2006. The respondent also deposited the entire duty of Rs. 5,71,47,148/-. Since conditions/parameters for the admission of a case prescribed under Section 32E(1) of the Central Excise Act, 1944 [for short "the Act"] were fulfilled and complied with, the application of the respondent for settlement was entertained and the same was proceeded with in terms of Section 32F(1) of the Act.

5. After considering the records and hearing the parties the Commission came to the findings that while the wrongful CENVAT credit was taken from the year 2001 to 31.03.2006, the payments refunds have been made on 22.02.2006 and on five different dates in March, 2006 and on 20.11.2006 and, therefore, the respondent had the benefit of availing the large amount of CENVAT credit to which they were not entitled. Considering the said fact, the Commission felt and was of the view that the appropriate interest liability has to be borne by the respondent on such wrongful availment of CENVAT credit. Accordingly, the applications of the respondent were settled under Section 32F(7) of the Act subject to the following terms and conditions: -

"(a) The amount of duty relating to wrongful availment of CENVAT credit is settled at Rs. 5,71,47,148/-. As the entire amount has already been paid by the applicant, no further duty remains payable. The Bench directs that the said amount of deposit by the applicant shall be appropriated against the amount of duty settled in this Order. Besides the above, the inadmissible CENVAT credit of Rs. 78,97,255/-,