2011 (9) TMI 469 - AT - Central Excise

Cenvat Credit - Claim of Depreciation and Credit Simultaneously - Assessee revise the income tax Return and claim of Modified Depreciation and balance claimed as revenue expenditure - In view of SSK Ltd. vs. CCE, Aurangabad, (2003 (5) TMI 147 - CEGAT, MUMBAI), CENVAT credit is not deniable in case depreciation of an amount equivalent to duty paid on the goods was initially claimed in the income tax return but later on the return was revised and the benefits so availed was nullified. In view of these judgments the claim of the assessee cannot be disregarded - Case remanded back.

Summary

Issues involved:
1. Claim of CENVAT credit on capital goods along with depreciation under Income Tax Act.
2. Disallowance of CENVAT credit and imposition of penalty.
3. Revision of income tax return affecting the claim of depreciation and CENVAT credit.
4. Adequacy of documentary evidence for revenue expenditure claim.
5. Adjudicating authority's decision on disallowance and penalty.
6. Appellate authority's decision on disallowance, penalty, and interest.
7. Interpretation of rules regarding revision of income tax return affecting CENVAT credit claim.
8. Applicability of judicial precedents on CENVAT credit and depreciation claims.
9. Remand of the matter to the original adjudicating authority for redetermination.

Detailed Analysis:

1. The case involved a dispute regarding the availing of CENVAT credit on capital goods along with claiming depreciation under the Income Tax Act. The department issued a show cause notice to recover the wrongly availed CENVAT credit, interest, and penalty. The lower adjudicating authority disallowed the claim and imposed penalties, leading to an appeal by the assessee.

2. The Commissioner (Appeals) allowed the assessee's contentions, stating that the disallowance of credit and penalties were not sustainable. The department appealed against this order, arguing that revising the income tax return does not nullify the initial wrongful claim of credit. They also contested the lack of evidence for revenue expenditure claim.

3. The Tribunal noted that the assessee revised the income tax return, reducing the depreciation claim and treating the balance as revenue expenditure. The adjudicating authority did not provide specific reasons for disallowing this claim, leading to a challenge by the department on the admissibility of the revised claim.

4. The Tribunal observed discrepancies in the lower appellate authority's decision, particularly regarding the demand for interest and penalty. The authority's conclusion was deemed contradictory, leading to the need for setting aside the order. The Tribunal also referred to judicial precedents supporting the assessee's position on CENVAT credit and depreciation claims.

5. Ultimately, the Tribunal decided to remand the matter to the original adjudicating authority for a fresh consideration and redetermination of the CENVAT credit amount ineligible for availment. The assessee was granted the opportunity to produce additional documentary evidence for their claim, emphasizing compliance with the law in the decision-making process.

This detailed analysis highlights the complexities of the case, including the interplay between CENVAT credit, depreciation claims, documentary evidence requirements, and the application of judicial precedents in resolving the dispute.