2006 (9) TMI 413 - AT - Central Excise

Summary

Issues involved: Denial of capital goods credit under Rule 12 of the Cenvat Credit Rules, 2002 and imposition of penalty under Rule 13.

Capital Goods Credit Issue:
The lower authorities denied capital goods credit of Rs. 2,80,275 to the appellants under Rule 12 of the Cenvat Credit Rules, 2002, citing simultaneous availing of depreciation for income-tax purposes. However, it was argued that the jurisdictional Asst. Commissioner of Income-tax had deducted the Cenvat value of the goods from taxable income, eliminating the simultaneous availment. A certified copy of the assessment order was produced to support this claim. The Tribunal set aside the lower authorities' orders and remanded the case for a fresh decision, directing the original authority to consider the income-tax assessment order and provide the appellants with a reasonable opportunity to be heard.

Penalty Imposition Issue:
In addition to denying the capital goods credit, a penalty of Rs. 10,000 was imposed on the party under Rule 13 of the Cenvat Credit Rules, 2002. The Tribunal's decision to remand the case for a fresh decision on the capital goods credit issue implies that the penalty imposition is also set aside pending the outcome of the reassessment. The appeal was allowed by way of remand, indicating that both the denial of credit and the penalty imposition are subject to review based on the new assessment.

*(Dictated and pronounced in open Court)*