2011 (10) TMI 56 - AT - Central Excise

Cenvat Credit - simultaneous depreciation was claimed, appellant filed revised income tax returns and intimated the department on 19.3.2007. However, show cause notice was issued on 24.1.2008 - appellant had only produced a certificate from Chartered Accountant - appellant had filed revised return which resulted in reduced depreciation - in two years the revised depreciation claim is actually more than which was claimed earlier and therefore the matter is required to be reconsidered - once the revised return is filed, the demand for cenvat credit cannot be sustained - figures of depreciation claimed or to be claimed required proper explanation and they shall produce revised income tax return and detailed explanation about the depreciation claimed so that original adjudicating authority is satisfied that no depreciation has been claimed in respect of the duty element on capital goods on which the credit has been taken - impugned order is set-aside, matter is remanded to original adjudicating authority

Summary

Issues:
1. Claiming depreciation on the duty element of capital goods on which cenvat credit was taken.
2. Consideration of revised income tax returns in relation to the claim of depreciation and cenvat credit.
3. Applicability of previous tribunal and court decisions on the issue of revised returns and double benefits for the assessee.

Analysis:
Issue 1:
The appellant had claimed depreciation on the duty element of capital goods for which cenvat credit was availed, contrary to the Cenvat Credit Rules. A show cause notice was issued to disallow the cenvat credit amount. The original adjudicating authority observed discrepancies in the revised income tax returns filed by the appellant, leading to uncertainty regarding the claimed depreciation. The Commissioner (Appeals) noted the need for a clear explanation and evidence to reconcile the revised depreciation figures with the original claims.

Issue 2:
The learned counsel for the appellant argued that filing revised income tax returns resulted in reduced depreciation, indicating compliance with the rules. Previous tribunal decisions, such as in the cases of Prasad Machinery Pvt. Limited and Ennar Spinning Mills, established that filing revised returns could negate the demand for cenvat credit. The High Court of Gujarat's decision in the case of Nish Fibers further supported this stance, emphasizing the acceptance of revised returns by income tax authorities as a basis for allowing cenvat credit claims.

Issue 3:
The Tribunal recognized the precedents set by previous decisions, which concluded that revised returns withdrawing depreciation claims could lead to the allowance of cenvat credit. The learned counsel acknowledged the necessity of providing detailed explanations and evidence to demonstrate that no depreciation had been claimed on the duty element of capital goods for which cenvat credit was availed. Consequently, the impugned order was set aside, and the matter was remanded to the original adjudicating authority for a thorough review of the revised depreciation claims and their acceptance by the Income Tax authorities.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented, and the legal precedents relied upon to arrive at the decision to remand the matter for further examination.