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2016 (10) TMI 732 - AT - Central ExciseDemand of interest - imposition of penalties - simultaneous availment of CENVAT credit on capital goods and depreciation of the duty portion of the value of capital goods under Section 32 of the Income Tax Act, 1961 during the financial year 2007-08 - the original authority has not ordered the recovery of amount under the show cause notice in question as the same has already been adjusted in the books of depreciation by the applicants. It is also seen that the appellant had filed the revised return with the Income Tax authorities for the F.Y. 2007-08 and not claimed depreciation in the revised return. Revised return was filed within time limit set by the Income Tax Law - Held that - The issue is squarely covered by the judgment of the Hon ble Gujarat High Court in the case of CCE Surat-II Vs. Nish Fibres 2009 (12) TMI 415 - Gujarat HIGH COURT where the claim regarding depreciation withdrawn by filing revised return and such revised return accepted. Credit not deniable. Since the assessee have adjusted the amount of Cenvat Credit in their depreciation account, I do not intend to demand the amount of ₹ 1,70,820,/- once again . Once the demand proposed in show cause notice has been dropped, there is no question of interest or imposition of penalty under 11 AC equivalent to the demanded amount. Appeal allowed - decided in favor of appellant.
Issues:
Demand of interest and imposition of penalty on availing Cenvat credit and depreciation simultaneously. Analysis: The appeal was filed against an order-in-appeal dated 28.02.2012 by the Commissioner of Central Excise & Customs, Mumbai-II. The issue revolved around availing Cenvat credit of ?1,70,820 on capital goods and simultaneously claiming depreciation of the duty portion under Section 32 of the Income Tax Act, 1961 during the financial year 2007-08. The appellant contended that they did not take double benefit and reversed the depreciation amount within the Income Tax time limit, citing a judgment of the Hon'ble Gujarat High Court. On the other hand, the Assistant Commissioner (AR) supported the Commissioner's findings and highlighted the delay in filing the revised Income Tax return, referencing a case law from NARAYAN KRISHNA SPINNERS LTD. Vs. C.C., COIMBATORE 2005(192)E.L.T.490(Tri. Chennai). The Tribunal examined the records and found that the original authority did not order recovery as the depreciation amount had been adjusted in the books within the Income Tax time limit. The revised Income Tax return for FY 2007-08 was filed without claiming depreciation, and it was within the prescribed time frame. The Tribunal relied on the judgment of the Hon'ble Gujarat High Court in the case of CCE Surat-II Vs. Nish Fibres, emphasizing that an assessee cannot claim Modvat credit if depreciation is allowed under the Income Tax Act. The Tribunal also distinguished the facts of other cases cited by the parties, ultimately dismissing the appeal and allowing the Modvat credit to the appellant. Furthermore, the adjudicating authority noted that since the assessee adjusted the Cenvat Credit amount in their depreciation account, there was no need to demand the same amount again. Consequently, there was no basis for imposing interest or penalty equivalent to the demanded amount. The appeal filed by the appellant was allowed, and the decision was pronounced in court on 30.9.2016.
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