2010 (4) TMI 952 - AT - Central Excise

Summary

Issues:
1. Whether the demand representing reversal of 50% of the credit taken by the assessee was correctly set aside by the Tribunal.
2. Whether there was a simultaneous availment of Cenvat credit and income tax depreciation by the assessee.
3. Whether the appropriation of the amount paid by the assessee should have been upheld to prevent double benefit.

Analysis:
1. The Tribunal, in the final order, set aside the demand of Rs. 3,63,467/- representing reversal of 50% of the credit taken by the assessee. The Tribunal held that the assessee did not contravene the provisions of Rule 4 (4) of the Cenvat Credit Rules, 2001 by availing both Cenvat credit and income tax depreciation for the second instalment of 50% credit. This decision was based on the assessee's method of availing 50% credit on capital goods in the year of purchase and the remaining 50% in the subsequent financial year. The Tribunal found that the assessee had not simultaneously availed double benefit, as they deducted the Cenvat credit from the value of the capital goods for depreciation purposes in a staggered manner.

2. The Revenue contended that the appropriation of the amount paid by the assessee should have been upheld to prevent double benefit. However, the Tribunal found that the assessee had followed a specific method of availing Cenvat credit and depreciation, ensuring that there was no simultaneous availment of double benefit. The Tribunal highlighted that the assessee deducted the Cenvat credit from the value of the capital goods for depreciation purposes in a structured manner, which did not result in double benefit. Therefore, the Tribunal dismissed the Revenue's argument and upheld its decision to set aside the demand.

3. The Tribunal's analysis focused on the methodical approach adopted by the assessee in availing Cenvat credit and depreciation on capital goods. The Tribunal emphasized that the assessee had not committed any error or contravention that would lead to double benefit. By availing 50% of the credit in one financial year and the remaining 50% in the subsequent year, and deducting the credit from the value of the capital goods for depreciation purposes accordingly, the assessee ensured that there was no simultaneous availment of double benefit. Consequently, the Tribunal rejected the Revenue's claim of mistake apparent in its final order and dismissed the application for recall.

In conclusion, the Tribunal's judgment upheld the assessee's methodical approach in availing Cenvat credit and income tax depreciation, ensuring that there was no simultaneous availment of double benefit, and dismissed the Revenue's application for recall of the final order.