2012 (7) TMI 261 - AT - Central Excise

No Cenvat credit can be taken if a manufacturer claims depreciation under the Income Tax Act - Held that - The assessee submission that he had filed a revised Income Tax Return and in that he had not claimed the depreciation - Since it is not clear from this record whether the revised return is accepted by the Income Tax authority the matter is remanded back to the adjudicating authority to decide the issue afresh after taking into consideration the assessment order passed on the revised Income Tax Return - in favour of assessee by way of remand.

Summary

Issues:
1. Availing of Cenvat credit on duty paid capital goods.
2. Denial of credit due to claiming depreciation under the Income Tax Act.
3. Revision of Income Tax Return affecting the depreciation claim.

Analysis:

1. The case involved the respondents, engaged in sugar and molasses manufacturing, availing credit for capital goods and inputs. The issue arose when a Show Cause Notice was issued, denying credit on capital goods because the respondents claimed depreciation under the Income Tax Act. The rule in question stipulated that no credit could be taken on capital goods if depreciation was claimed on the duty part of said goods.

2. It was established that the respondents did claim depreciation on the capital goods for which they availed credit. However, the respondents argued in written submissions that they had filed a revised Income Tax Return wherein the depreciation claim was omitted. The Tribunal noted the uncertainty regarding the acceptance of the revised return by the Income Tax authority. Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision considering the assessment order on the revised Income Tax Return.

3. The Tribunal disposed of the appeal and cross-objection by remanding the case for further examination. The decision emphasized the importance of verifying the actual status of the revised Income Tax Return and its acceptance by the tax authorities before determining the impact on the claimed depreciation affecting the Cenvat credit on capital goods. The remand aimed to ensure a fair assessment of the issue, allowing both parties an opportunity to present their arguments based on the revised tax return's assessment order.