2016 (8) TMI 540 - AT - Central Excise

Cenvat credit - recovery of inadmissible credit - availed simultaneous Cenvat credit and depreciation under Income Tax Act, 1961 - impermissible in terms of Rule 4(2) and Rule 4(4) of the Cenvat Credit Rules, 2001 - Held that - Rule 4(4) of Cenvat Credit Rules 2001/2002 has a clear provision that if the depreciation is availed under Section 32 of the Income Tax Act, 1961 in respect of the duty suffered on capital goods the Cenvat Credit of the said amount cannot be allowed. Therefore both the lower authorities have correctly held that the Cenvat Credit in respect of the duty on which depreciation was claimed, is not admissible. Period of limitation - Invokation of extended period of limitation - Held that - the department was not aware about the simultaneous availment of depreciation as well as Cenvat Credit of the same amount of duty. Therefore there is a clear suppression of fact on the part of the appellant, therefore the demand is correctly raised by invoking extended period. - Decided against the appellant

Summary

Issues:
1. Admissibility of CENVAT credit and depreciation under the Income Tax Act, 1961.
2. Interpretation of Rule 4(4) of the Cenvat Credit Rules, 2001.
3. Time bar for raising demand due to suppression of facts.

Analysis:
1. The appeal challenged the rejection of the appellant's claim regarding the simultaneous availing of CENVAT credit and depreciation under the Income Tax Act, 1961, on certain capital goods. The appellant argued that there was no intention to avail wrong CENVAT credit, as they believed that by not claiming the CENVAT credit on the remaining 50% balance, they had utilized the depreciation benefit under Section 32 of the Income Tax Act, 1961. The appellant contended that there was no suppression of facts or misdeclaration. The appellant cited relevant judgments to support their position.

2. The Revenue, represented by the Assistant Commissioner, maintained that as per Rule 4(4) of the Cenvat Credit Rules 2001/2002, if depreciation under Section 32 of the Income Tax Act, 1961 is claimed on the duty suffered on capital goods, the CENVAT credit of that amount is not permissible. The Revenue argued that since the appellant had availed depreciation on the remaining 50% of the CENVAT credit, the appeal was not maintainable under the said rule.

3. The Tribunal examined the submissions from both sides and noted that the appellant had indeed simultaneously claimed CENVAT credit and depreciation on the same amount, which was not permissible as per Rule 4(4) of the Cenvat Credit Rules. The Tribunal upheld the lower authorities' decision that the CENVAT credit in such a scenario was not admissible. The Tribunal highlighted the findings of the Commissioner, emphasizing that there was a clear suppression of facts on the part of the appellant regarding the simultaneous availment of depreciation and CENVAT credit. The Tribunal concluded that the demand was correctly raised within the extended period due to this suppression, and thus upheld the impugned order, dismissing the appeal.

This detailed analysis of the judgment highlights the issues of admissibility of CENVAT credit and depreciation, interpretation of Rule 4(4) of the Cenvat Credit Rules, and the time bar for raising demands in cases involving suppression of facts.