2009 (1) TMI 654 - AT - Central Excise

Cenvat/Modvat - Capital goods - Depreciation - Held that - Once the claim for depreciation made in the income-tax return is reversed and a certificate to that effect is produced, the net result is that the appellants have not claimed depreciation during the relevant period and therefore would be entitled to the credit. Accordingly appeal filed by the revenue is rejected.

Summary

Issues:
1. Availment of credit on duty paid capital goods.
2. Disallowance of claim for depreciation.
3. Appeal against the Commissioner's order.
4. Cross-objections filed by the respondents.
5. Interpretation of rules regarding depreciation and CENVAT credit.

Analysis:
1. The respondents availed credit of duty paid on capital goods totaling Rs. 2,00,640/- over two years, 50% each in 2003-2004 and 2004-2005, alongside claiming depreciation. The Original Adjudicating Authority disallowed the claim for 2003-2004 due to capitalization and depreciation. The Commissioner reversed this decision, noting the reversal of depreciation claim in the financial year 2004-2005 and the production of an income-tax officer's certificate. The revenue appealed against this order.

2. The learned SDR reiterated the grounds of the Order-in-Original, while the respondents referred to a Tribunal decision supporting their position. The Judge found no reason to set aside the Commissioner's order, emphasizing that the rules aim to prevent double benefits under the Income-tax Act and CENVAT credit. Upon reversing the depreciation claim and providing a certificate, the appellants effectively did not claim depreciation, entitling them to the credit. Consequently, the revenue's appeal was rejected, and the respondents' cross-objections were disposed of.

3. The judgment underscores the importance of aligning claims for depreciation and CENVAT credit to prevent dual benefits. By demonstrating the reversal of the depreciation claim and producing a certificate, the respondents successfully justified their entitlement to the credit. The decision highlights the significance of compliance with tax and duty regulations to ensure fair and accurate financial treatment. The Tribunal's ruling serves as a reminder of the need for consistency and transparency in tax-related claims and declarations to uphold the integrity of financial processes and regulatory frameworks.