2009 (9) TMI 871 - AT - Central Excise

Summary

Issues:
Claim of simultaneous availment of Cenvat credit and depreciation benefit under Section 32 of the Income-tax Act, 1961.

Analysis:
The case involved a dispute regarding the simultaneous availment of Cenvat credit and depreciation benefit by the appellants, who were manufacturers of iron castings. The officers of the Divisional Preventive group visited the factory and observed that the assessees had claimed depreciation under Section 32 of the Income-tax Act, 1961, while also availing Cenvat credit on capital goods. The issue arose when the assessees claimed Cenvat credit on the remaining amount, including the balance duty, in the subsequent financial year, leading to the contention of simultaneous availment of two benefits, which was deemed impermissible by the authorities. The Deputy Commissioner, despite acknowledging that there was no simultaneous availment of Cenvat credit and depreciation benefit, confirmed the demand for recovery of credit and penalty. The Commissioner (Appeals) upheld the adjudication order, emphasizing that the assessees had enjoyed the entire benefit in the first year of receiving the capital goods, resulting in the simultaneous availment of benefits, which was against the law.

Upon hearing both sides, the Tribunal noted that there was no dispute that there was no simultaneous availment of 50% Cenvat credit and the benefit of depreciation under the Income Tax Act, as the 50% credit taken was reversed by the assessees. Consequently, the Tribunal held that since the assessees had not contravened the provisions of Rule 4(4) by availing both Cenvat credit and Income tax depreciation for the second instalment of 50% credit, the demand confirmed by the authorities was unjustified. Therefore, the Tribunal set aside the impugned order upholding the demand and allowed the appeal in favor of the assessees, emphasizing the lack of simultaneous availment of benefits as the crucial factor in the decision.

In conclusion, the judgment delved into the intricacies of Cenvat credit rules and the provisions of the Income-tax Act to determine the permissibility of simultaneous availment of benefits by the assessees. The Tribunal's decision hinged on the absence of actual simultaneous availment of Cenvat credit and depreciation benefit, leading to the reversal of the demand and penalty imposed by the authorities.