2017 (2) TMI 827 - AT - Central Excise

Cenvat credit - Capital goods - In the first adjudication order, the Modvat credit was denied on the ground that the appellants had availed double benefits, i.e. they have availed Modvat credit as well as claimed the depreciation of the same amount under the Income Tax Act, 1960 - Held that - As per the submission of the learned Counsel and perusal of the Income Tax return and calculation chart of the depreciation, it appears that the appellants have not claimed the depreciation in respect of the amount of Modvat credit which they have availed - However, on going through the records, prima face appears that the appellants have not claimed the depreciation in the respective financial years, therefore, the entire allegation in the show-cause notice stands collapsed - Appeal allowed by way of remand.

Issues:
1. Availment of Modvat credit on capital goods and denial of credit due to alleged double benefits.
2. Appeal against the denial of Modvat credit based on the alleged double benefits.
3. Arguments presented by the appellant's counsel regarding the depreciation claimed under the Income Tax Act.
4. Response from the Assistant Commissioner representing the Revenue.
5. Analysis of submissions from both sides by the Tribunal.
6. Finding that the appellants did not claim depreciation on the Modvat credit amount.
7. Decision to set aside the impugned order and remand the matter for further verification.
8. Directions for the original adjudicating authority to verify the non-claim of depreciation and dispose of the matter promptly.

Analysis:
The case involves the appellants availing Modvat credit on capital goods during 1996-97 to 1999-2000, leading to the denial of credit due to the alleged availing of double benefits. Initially, the credit was denied as it was believed that the appellants claimed both Modvat credit and depreciation under the Income Tax Act. The Tribunal remanded the matter to verify if the depreciation was actually claimed. In subsequent adjudication, the credit was again denied based on the belief that claiming depreciation at the time of taking credit resulted in double benefits. The appellant's counsel argued that no depreciation was actually claimed on the Modvat credit amount in the Income Tax returns, which was not raised earlier in the proceedings. The Revenue reiterated the findings in the impugned order.

Upon careful consideration, the Tribunal found that the appellants did not claim depreciation on the Modvat credit amount, a fact overlooked in the show-cause notice and not raised by the appellants previously. Therefore, the allegation of double benefits collapsed. The Tribunal set aside the order and remanded the matter to verify the non-claim of depreciation in the Income Tax returns regarding the Modvat credit on capital goods. The original adjudicating authority was directed to provide the appellants with a proper opportunity for a hearing and submission. Due to the case's age, the authority was instructed to resolve the matter within three months from the date of the order. Ultimately, the appeal was allowed by remanding it to the original adjudicating authority for further verification and disposal.

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