2015 (10) TMI 671 - HC - Central Excise

Denial of CENVAT Credit - Rule 57Q - Held that - Though the Rule in express terms does not provide for acceptance of the revised return, the said Rule needs to be read down to the effect that the credit as is sought for should not have been granted by the CEGAT, based upon the revised return and assessment thereof. The perusal of the order impugned discloses that the CEGAT has dealt with the said issue in detail. The CEGAT has considered all the factual matrix including that of the assessment orders passed by the income-tax authorities. The CEGAT has also given cogent reasons as to why the approach of the Commissioner, Central Excise in disallowing the credit is wrong. In that view of the matter, the contention raised by the learned Asstt. Solicitor General, that the assessment order passed by Income Tax Officer on the revised return submitted by the respondent should not have been accepted by the CEGAT is required to be rejected. That the reading down of the Rule as submitted by the learned Asstt. Solicitor General is also liable to be rejected in the light of reasons given by CEGAT in its order, which is impugned in the petition. - Decided against Revenue.

Summary

Issues:
Challenge to order of Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) allowing appeal regarding denial of credit under Rule 57-Q of Central Excise Rules, 1944 and imposition of penalty.

Analysis:
The petitioner contested the order passed by CEGAT that allowed the appeal of the respondent against the order of the Commissioner of Central Excise, Aurangabad dated 18-4-2002. The Commissioner had denied credit under Rule 57-Q of the Central Excise Rules, 1944, related to duty paid on capital goods, arguing it contravened Rule 57T. The appeal by the respondent was allowed by CEGAT on 1-5-2003, noting the respondent did not claim depreciation for Income tax purpose on the Modvat portion of the capital goods for the relevant period.

The Asstt. Solicitor General contended that the respondent's filing of a revised income tax return to show deduction of depreciation related to mod-vat credit should not allow the benefit of credit, citing Rule 57R of the Central Excise Rules, 1944. The rule states that no credit of specified duty paid on capital goods is allowed if depreciation is claimed under the Income-tax Act, 1961. The Asstt. Solicitor General argued that CEGAT should not have accepted the revised return for assessment, but CEGAT's detailed consideration of the issue, assessment orders by income-tax authorities, and reasons for disagreeing with the Commissioner's decision were found valid, rejecting the contention to read down the rule as suggested.

Ultimately, the Court found no grounds for interference, rejecting the writ petition and discharging the rule without any order as to costs.