2005 (3) TMI 9 - AT - Central Excise

Cenvat/Modvat on Capital goods - Depreciation and credit claimed in the same financial year due to oversight

Summary

Issues:
1. Challenge to duty and penalty imposed on M/s. Meenakshi Vilasa Company (P) Ltd.
2. Modvat credit on capital goods and claimed depreciation in Income-tax Return.
3. Eligibility for Modvat credit in respect of genset.
4. Penalty imposition and filing of revised income-tax return.

Analysis:
1. The Appellate Tribunal, after staying the recovery of duty and penalty, proceeded to hear the appeal challenging the order regarding Modvat credit on capital goods. The appellants contested the order only in relation to a specific genset for which they had taken Modvat credit and claimed depreciation in the income-tax return. The Tribunal upheld the demand not in challenge, reduced to Rs. 1,47,217/- minus Rs. 1,16,037/-.

2. Regarding the gensets, the learned consultant argued that central excise duty was paid, depreciation claimed under the Income-tax Act, and Modvat credit availed due to an oversight but later reversed in the same financial year. Citing relevant cases, the consultant emphasized that Modvat credit should be allowed if depreciation for income-tax purpose was not claimed. The absence of penalty imposition was advocated due to the filing of a revised income-tax return. The matter was remanded to the Original Adjudicating Authority to verify the revised income-tax return and reassess the eligibility for Modvat credit in respect of genset after hearing the appellants. The penalty amount was reduced to Rs. 5,000 in the interest of justice.

3. The Tribunal's decision was dictated and pronounced in open court, providing a comprehensive resolution to the issues raised in the appeal.