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2013 (12) TMI 1190 - AT - Central ExciseCenvat credit availed on depreciated value of the capital goods installed in factory - Waiver of pre-deposit Held that - Prima facie an assessee is entitled to avail CENVAT Credit on capital goods if no depreciation has been claimed under Section 32 of the Income Tax Act, 1961 - the applicant has availed depreciation for the financial years 2004-05, 2005-06 and claimed CENVAT Credit on the reduced value of capital goods from 01.06.2007 after mining services became taxable service - Assessee contended that they themselves had calculated the amount of duty involved in the respective invoices of the capital goods and deducted the amount of duty representing the value on which depreciation has been claimed during 2004-05, 2005-06 and availed CENVAT Credit on the balance amount - There was no such a mechanism is available under the CENVAT Credit Rules - the applicant directed to deposit Rupees Two Crores Twenty Five Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
Issues:
1. Waiver of pre-deposit of CENVAT Credit and penalties imposed under CENVAT Credit Rules and Finance Act, 1994. Analysis: The judgment revolves around the application seeking waiver of pre-deposit of CENVAT Credit amounting to Rs.11.70 Crores and corresponding penalties. The primary contention raised by the Appellant was related to two key issues. Firstly, the Appellant availed CENVAT Credit on the depreciated value of capital goods installed in their factory during specific financial years. The Appellant argued that they were entitled to avail CENVAT Credit on the value of capital goods for which no depreciation had been claimed under Section 32 of the Income Tax Act, 1961. Secondly, the Appellant admitted to availing CENVAT Credit on Special Additional Duty (SAD) amounting to Rs.2.30 Crores, which was not admissible under the CENVAT Credit Rules, 2004. The Appellant reversed the entire amount of the inadmissible credit, including payment through cash and interest. The Revenue contended that since the Appellant had already claimed depreciation on the capital goods for the relevant financial years, they were not eligible to avail CENVAT Credit on the depreciated value in the subsequent year. Additionally, the Revenue disputed the adjustment made by the Appellant in the revised return regarding the reversal of the credit amount related to SAD. Upon hearing both parties and examining the records, the Tribunal observed that an assessee is entitled to CENVAT Credit on capital goods only if no depreciation has been claimed under Section 32 of the Income Tax Act, 1961. In this case, the Appellant had claimed depreciation for the specified financial years and subsequently availed CENVAT Credit on the reduced value of capital goods. The Tribunal noted that the mechanism adopted by the Appellant to calculate the credit amount was not in accordance with the CENVAT Credit Rules. Consequently, the Tribunal directed the Appellant to deposit a specific amount within a stipulated timeframe. Upon compliance with the deposit requirement, the balance amount of dues would be waived, and recovery thereof stayed during the pendency of the Appeal. In conclusion, the judgment provided clarity on the eligibility criteria for availing CENVAT Credit on capital goods and emphasized adherence to the prescribed rules and procedures in such matters.
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