2006 (4) TMI 332 - AT - Central Excise

Summary

Issues:
Claim of depreciation on account of Cenvat credit on Capital Goods.

Analysis:
The appellant filed an application for stay of the operation of Order-in-Appeal No. 130/2005-CE and for full waiver of the pre-deposit amount of duty and penalty, each amounting to Rs. 2,29,841/-. The dispute revolved around the claim of depreciation on account of the Cenvat credit on Capital Goods. The appellant contended that they have not availed any depreciation from the Income Tax Department on the portion of Cenvat credit used for Capital Goods. However, the lower authorities did not accept this argument, stating discrepancies between Income Tax Returns and Books of Accounts. The Commissioner (Appeals) denied the credit, leading to a duty amount of Rs. 2,29,841/- and an equal penalty. The learned SDR acknowledged that there was evidence supporting the appellant's claim regarding depreciation on Cenvat credit for Capital Goods.

The Tribunal carefully reviewed the case records and found that the issue was straightforward, deciding to address both the stay and appeal simultaneously. The revenue alleged that the appellants violated Rule 57 R(8) of Central Excise Rules/Rule 4(4) of Cenvat Credit Rules 2001/2002 by simultaneously availing Cenvat credit and depreciation under Section 32 of the Income Tax Act. However, after examining the Income Tax Returns, it was evident that depreciation under Income tax was claimed after deducting the Cenvat credit, amounting to Rs. 13,31,101/-. This indicated that there was no simultaneous availment, as alleged. The Tribunal agreed with the appellant's argument that there was no intention to evade duty payment, hence the longer period could not be invoked. The findings of the Commissioner (Appeals) were deemed incorrect as they were not supported by facts from the Income Tax Returns. The Tribunal also noted that differences in figures between Books of Accounts and Income Tax Returns were due to varying depreciation calculations under different Acts.

Consequently, the demand for credit availed and the imposition of an equal penalty were deemed unwarranted. The Tribunal granted the stay application for waiving the pre-deposit amount and proceeded to allow the appeal itself after examining the evidence and observations made. Therefore, both the stay and appeal were allowed, bringing the matter to a close.