2010 (9) TMI 259 - AT - Central Excise

Demand of duty - denial the benefit of modvat credit - in respect of capital goods on the ground that they have also availed depreciation from the income tax authorities - appellant revised their income tax returns wherein their claim for depreciation in respect of capital goods was withdrawn - returns without the claim of the depreciation stands accepted by the income tax authorities - order is set aside and matter remanded to Commissioner (Appeals) for fresh decision in the light of the observations

Summary

Issues:
1. Dismissal of appeal for non-compliance with stay order.
2. Denial of modvat credit for capital goods due to availing depreciation from income tax authorities.
3. Revision of income tax returns to withdraw claim for depreciation.
4. Verification of acceptance of revised returns by income tax authorities.
5. Remand of the matter to Commissioner (Appeals) for fresh decision.

Analysis:
1. The judgment addresses the issue of the dismissal of the appeal by the Commissioner (Appeals) due to non-compliance with the stay order directing the appellant to deposit a specific amount against confirmed duty. The Tribunal observed that the appellant revised their income tax returns to withdraw the claim for depreciation in respect of capital goods, which was a key factor in the dismissal of the appeal.

2. The denial of modvat credit for capital goods was based on the appellant availing depreciation from the income tax authorities. The Commissioner (Appeals) had not considered the subsequent acceptance of the revised income tax returns by the authorities. The Tribunal noted that the denial of benefit was contingent on the claim for depreciation, which had been withdrawn in the revised returns.

3. The Tribunal highlighted the importance of verifying the acceptance of the revised income tax returns by the authorities. The appellant's advocate presented this crucial information, indicating that the appellant's case could be strong if the revised returns without the claim for depreciation were indeed accepted. This verification was deemed essential for a fair consideration of the appeal.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for further examination. The Tribunal directed the Commissioner to verify the acceptance of the revised returns by the income tax authorities. If confirmed, the appellant's appeal was deemed worthy of consideration without the requirement of pre-deposits.

5. The judgment concluded by disposing of the stay petition, noting that the appellant had already deposited a partial amount. The impugned order was set aside, and the matter was remanded to the Commissioner (Appeals) for a fresh decision based on the observations and verification of the revised income tax returns. The stay petition and appeal were both disposed of in accordance with the Tribunal's directions.